Real Estate News & Commentary

Breaking News: Newbie Flipper Makes Disturbing Discovery That It’s Not Like on TV

Expertise: Real Estate Investing Basics, Real Estate News & Commentary, Personal Development, Flipping Houses, Landlording & Rental Properties, Personal Finance
103 Articles Written

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.”

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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…”

house flipping

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?

We want to know your story! Leave a message below.

Mindy Jensen has been buying and selling homes for more than 20 years. She buys houses, moves in, makes them beautiful, sells them, and starts the process all over again. She is a licensed real est...
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    Fred K. Investor from Richmond, Virginia
    Replied over 4 years ago
    This was a costly learning experience but also looks to me like Mark is a newbie and did not know anything about flipping. First mistake was the commission. Find an agent that will work with you on the commission. My agent gives part of the purchase commission back and charges a flat fee on the sale. We would have made up almost all the $5,000 Mark lost just on the commission. Second mistake is the $10,000 to rewire the house. Our electrician will rewire a house for around $2,000. Hope this has not turned Mark off to flipping and he will use this as a learning process to help him in the future.
    Roberto Caprio Real Estate Agent from Miami, Florida
    Replied over 4 years ago
    if only Mark really existed…this kind of posts is actually deceiving because it makes people believe that all they have to do is avoid these unbelievable mistakes and they will be well on their way to make tons of money. I mean, surely they are not going to give money to a stranger from Craigslist before he does any work, right? So, now that they know they belong to the “smart flipper” category, they are ready to invest profitably? Hmmm… maybe not, it takes A LOT more than just avoiding this basic mistakes to turn a profit.
    Matt Huber Lease Option and Owner Financing from Houston, Texas
    Replied over 4 years ago
    Replacing the wiring was a fantastically stupid decision. There is absolutely NOTHING wrong with aluminum wiring, in fact nearly all high voltage wiring is aluminum. The problem is the interface between aluminum wire and switches/outlets designed to work with copper wire where the difference in expansion between the Al [aluminum] and Cu [copper] (historically) loosened wires which sometimes resulted in fires. The problem is easily solved in one of two ways: 1) buy Al/Cu (special aluminum to copper) connectors DESIGNED to handle the difference in expansion between Al and Cu – which is the main reason for the (historical) fires (which are now mostly fiction) 2) buy special outlets and plugs from an electrical supply distributor which are designed to connect to aluminum wiring. You are not likely to find these specially designed switches/outlets at your run of the mill hardware store. The electrical contractor took Mark for a ride by replacing all the wire when he knew much cheaper solutions exist. Do a google search yourself and the top listings on the topic are 7 to 10 years old. If fires being caused by aluminum wires were such a big problem you’d see a lot more recent articles on the subject. The other clear indicator is being able to obtain insurance. If fires were such a huge risk, insurance companies would not insure. Sure some insurance companies may have concerns about aluminum, but they are in the minority. I bought, insured and sold a house with aluminum wiring and the insurance company didn’t even ask the question about what type of wiring existed. It was never a concern because the previous contractor had installed the proper Al/Cu interface connectors.
    John Murray from Portland, Oregon
    Replied about 3 years ago
    I have been successful in RI. I have flipped, subdivided and now settled on BRRRR for wealth building. If a person is a newbie and knows very little about market history, local trends and electro-mechanical assembly that person will fail. Its not like any other business venture, the variables are great. If this was a laissez faire economy RI would be easy. Unfortunately what we do is highly regulated, Federal and local government policy. as well as defacto elements will effect profit. When the regulators run blind bad things happen, the regulators will dictate when the time is correct to profit. A newbie has to study and look at the big picture before investing. This is not rocket science but it is a complicated puzzle of many variables.
    Matt Hourigan from Milwaukee, WI
    Replied almost 3 years ago
    This reads like a stock photo.