Flipping 411: 7 reasons it isn't as easy as it looks on TV
They're entertaining, make house repairs look fun and if you're the entrepreneurial type, may make you want to flip houses.
HGTV shows like "Fixer Upper" and "Property Brothers" have spurred growth in quick renovations of run-down homes. CNBC reports that 207,000 U.S. homes were flipped in 2017 — the highest number in a decade. But before thinking about flipping a house:
You must understand the market. You need the right property, in the right location, at the right time and price.
You need capital. Down payments are typically required, and interest racks up if a project or sale take longer than expected.
Numbers must align. The purchase price should amount to no more than 70 percent of after-repair value minus cost of repairs.
Unexpected issues are common. Renovations often uncover expensive problems.
The time commitment can be brutal. That can conflict with a day job or family commitments. You must supervise even when hiring others.
You can't be good at everything. Consider which renovations are crucial, which can be skipped and which must be contracted out.
Sales must be quick. Profits can easily be chewed up by long-term costs associated with mortgages, utilities, etc.