HGTV is perfect for entertainment…but not so much when learning the realities of fix & flips. Here’s what’s wrong.
Do you know why fixing & flipping homes are more popular than ever? It’s HGTV! We’re overloaded with these fix & flip shows that cram a $100,000 profit deal into a half-hour segment. It looks so fun and easy. Unfortunately, in this case, looks are incredibly deceiving. Fix & flips can be all those things, it’s true, but that’s not the whole story.
In truth, HGTV reality shows get more wrong than right. They focus on the wrong age groups, pretend budgets don’t need to be followed, completely gloss over the complexity of the real estate market, and sometimes don’t even show a real fix & flip!
It’s enough to make your head spin if you’re an actual real estate investor. So let’s dive into breaking some of these misleading marketing tactics up and talk about the truth of fix & flip investing, for better or worse.
It Skews the Age of Real Estate Investors
Watching any of these fix & flip shows, it’d be easy to assume all us investors are young, hot married couples with closets full of flannel shirts and skinny jeans. The truth is that most successful real estate investors aren’t in their early thirties and making a go of it. Statistically, it’s more likely that real estate investing has become a post-retirement career or has taken a lot of years for it to become successful.
Here’s the latest data showing what percent of homeowners doing renovations belong to each generation. Of course, not all these are flippers, but it still gives us a good idea:
|Generation||Percentage of Overall Real Estate Investors|
I don’t show you this to deter you from getting into flipping if you’re younger; far from it. I think successful real estate investing comes from being business savvy and understanding the market more than it does hitting a certain number of candles on your birthday cake.
Instead, this little fun fact is more for my readers who thought it might be too late to start real estate investing. It’s never too late, and chances are that your years of experience will only improve your chances of becoming successful.
It Pretends that Finding Deals is Effortless
Those episodes feel like they’re skipping to the last chapter of a book or the final 20 minutes of a movie! They’ve left out most of the actual work and effort that goes into making a deal happen. Most fix & flippers aren’t successful because they can’t find deals – not because things go wrong with rehab or funding (although those do pop up).
Luckily, I’ve got a tried and true method for sourcing deals off the MLS that you can use called Driving for Dollars. Just don’t let HGTV know about it.
It Frames Problems as Easily Solvable
Most new fix & flippers don’t get that they’re not really in the real estate business; they’re in the problem-solving business. So when these half-hour shows add in “adversity,” it’s far from what it’s like in the real world. They make a phone call, and the problem magically goes away. Meanwhile, for you and me, it could be a week-long headache that actually may tank the deal in the end.
I see this all the time. People come to me with false expectations, thinking they’ll be able to scoop deals up by the handful that will practically fix & flip themselves only to end up scrambling for a solution to a problem that could’ve been easily avoided had they gone into this with the proper perspective. Fix & flips can be profitable, but that profit won’t come quickly. You need to be versatile, patient, and know how to think critically in a high-pressure situation.
Budgets Aren’t Mandatory on TV
Here’s an interesting one: the hosts are working with a $600,00 home and find out something will cost them more than they previously budgeted. They figure it’ll be another $30k or so, and they’re like, “Okay, we can make that work.”
How nice for them, right?
In the real world, being able to secure a loan that large, and then shrug off $30k profit from their estimates just doesn’t work for the majority of deals out there. Plus, factoring in what you’ll need to do to get that $30,000 emergency loan funded quickly is never shown. Where is the guest spot from their hard money lender? That’s what I want to see!
They Get the Definition of “Fix & Flip” Wrong
Some episodes I’ve seen make you think they’re doing a big fix & flip for profit, but it’s nothing more than a home makeover show. They’ll go in and fix some things, redecorate, and have the original homeowner move right back in.
Of course, that looks fun, right? Some people want to get into fix & flips because they love interior design and want to make pretty houses. Unfortunately, that’s such a small part of what we do! When these fix & flippers come in with unrealistic expectations about what the work is, there’s a major letdown that can cost them a lot more than the price of beadboard.
In truth, a typical fix & flip will take an average of six months to sell because you’re dealing with multiple people’s timelines, budgets, and market conditions. Heading to IKEA or Pottery Barn for new decor does not a fix & flip make.
Fix & flip shows are good entertainment, but you should treat them as fiction. They’re so far removed from what a real deal looks like that you can’t even compare. Anything that can net you tens of thousands requires education, hard work, persistence, and dumb luck.
Did I miss something you think other investors need to know about the reality of fix & flips? Leave a comment and let me know.