Richmond, VA — In a shocking realization that shook him to his core, newbie fix and flipper Mark Smith discovered recently that flipping houses “isn’t nearly as easy as it looks on those TV shows.”
Smith had seen TV shows that highlighted rehabbers, making the process look easy, fast, and just generally “a fun time with attractive-looking people.”
“It turns out, those shows aren’t completely accurate,” Mark lamented.
“I mean, on the show, those guys buy the house, tear it apart super-quick, then put it back together and sell for a huge profit. They always run into that ONE big problem — but it’s fixed within 24 hours, no exceptions.” Mark’s eyes glazed over with nostalgia as he reminisced back to a simpler time when flipping seemed like a fun afternoon activity to be sandwiched between meals.
What They Don’t Tell You
“They don’t show you how hard it is to find a good contractor, how long it takes to find the house in the first place, or even mention big ‘surprise’ problems like bad plumbing.” Mark continued, “Also, they make it seem like people are lining up to buy your house. I had to drop the price on my house four times before it sold, and I ended up losing money! I didn’t even get to slap that huge ‘SOLD’ sticker over the ‘For Sale’ sign like they do at the end of each episode of my favorite show.”
Mark shared the story of giving a sizable deposit to a contractor he found on Craigslist, only to have the contractor skip out on him and steal his money.
“That hurt. I was really embarrassed I got taken like that. No one on TV is ever that mean. I learned my lesson and didn’t give the next guy a deposit. At least I didn’t feel so silly when he didn’t show up, either.”
Related: 7 Ways TV Flipping Shows Are Completely Fake (As Any REAL Investor Knows!)
“Then I got smart. I asked a friend who he used to remodel his basement. That guy came out and gave me an estimate, but told me he couldn’t start for 3 weeks. But my friend Joe had used him, so I waited for those 3 weeks. Besides, I couldn’t find anyone else.”
The third contractor finally got started on the rehab, more than 6 weeks after Mark purchased the property.
“I started picking out things like cabinets and counters, tile, toilets and faucets, so that time wasn’t all wasted,” Mark added.
A $10,000 Problem
But his rehab soon took a turn again, when his contractor started demolition, and discovered aluminum wiring — something Mark hadn’t budgeted for but now had to replace.
“Apparently, aluminum wiring can catch on fire. I didn’t know that, and even though it was marked in the Seller’s Property Disclosure, my agent didn’t tell me that was a bad thing,” Mark said. “Rewiring the entire house cost me $10,000 I hadn’t planned on — and added another two weeks to the project when my contractor’s preferred electrician couldn’t start right away. I thought I could just list it at a higher price to make up the difference.”
“I can’t believe I had a $10,000 expense that didn’t even make the house look cooler,” Mark sighed. “I mean wiring is boring!”
Commissions and Holding Costs: Who Knew?
Mark’s real estate agent wasn’t very helpful during the purchase of the home. She recommended that he pay full asking price so he didn’t lose the home to another buyer. He trusted her judgment instead of running his numbers to make sure they made sense.
“Before I bought the house, she said it would easily sell for $50,000 more than I paid for it once it was all fixed up. But I think she was just guessing. I paid $135,000 for the house and ended up putting $45,000 into the remodel. Listing it for $185,000 when I’m all-in at $180,000 seemed like throwing money away. So I listed it at $200,000. I figured I would at least break even. The house sat there for 2 weeks before I even got a showing.
Related: 7 Things I Desperately Wish I Had Known When I Started Flipping Houses
“Turns out, the house was really only worth $175,000. I ended up losing quite a bit of money when you factor in the cost of the loan, the rehab itself, the real estate agent commissions that I didn’t think about when I bought the house. I’m pretty sure I paid too much for it to start off.
“Those guys on TV never talk about agent commissions or holding costs. I wish I had known about all these other things before I bought the house…”
Don’t Make Mark’s Mistakes
After a few moments of reflection, Mark concluded, “If this teaches one potential investor that flipping houses is more than just swinging a hammer through drywall, picking paint colors that ‘pop,’ and then high fiving your ‘team,’ my bad experience will be all worth it.”
He then waved a quick goodbye, indicating that his favorite DIY show was coming on in the next few minutes.
[Editor’s Note: We are republishing this article to benefit our newer readers.]
Poor Mark. Did YOU know what you were getting into the first time you flipped a house?
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