The Perception of Flipping Houses as a Good Business
As a professional real estate investor, I am in the business of buying, renovating, and selling houses for profit. However, neither David nor I particularly like the term “house flipping.” At HomeVestors®, the phrase is rarely used to describe what we do. So, to begin, I asked David if he would help new and would-be investors understand why that is.
The reason we don’t like the term is that it implies easy, fast money. House flipping is more than an overnight process. It’s a process of finding a house that meets certain criteria, buying the house, spending money to fix it up, then selling it or renting it. There’s a lot involved.
Also, the reality is that professional real estate investors don’t make a killing on any one house. But, they can do really well by knowing what price they can pay and how to rehab it the best and most efficient way. They do that over and over again. They buy and sell a lot of houses.
Unfortunately, he added, many of the popular house-flipping TV shows perpetuate the notion of making easy, fast money. He notes that it’s especially troubling when the shows’ producers share how much a house was bought, renovated, and sold for–without disclosing all the details. A seemingly fast turnaround on one renovated house that yields an apparently substantial profit falsely gives viewers the idea that there’s big money in buying and renovating a property with little effort or risk. As a result, if they decide to invest, they might be less likely to make good real estate investment decisions and, instead, overpay for a property and its rehab. Then, says David, “they’ve got a house that they can’t sell for what they put into it.”