The television channel A & E has a show called Flip This House which chronicles the experience of flipping houses for a profit.
There are four main families/couples on the television show Flip This House. Armando is the cheap businessman from Texas, Brian and Peter are best friends from Atlanta, Than and Paul are best friends who flip houses with Paul’s older brother JD in Connecticut, and then there is Rudy in LA.
Rudy is my favourite personality on Flip This House. He only flips high quality homes with several upgrades in various LA neighbourhoods. The LA homes that Rudy flips are smaller than homes in other cities on Flip This House; this is why he focuses on upgrades and exterior living space.
The key to successfully flipping houses is to know your market. In Georgia Brian and Peter focus on the kitchen as a main selling point for Southern home cooking, and in Connecticut Than and Paul focus on having several bedrooms. Than and Paul focus on selling to new/young families; they like to have 1 bathroom for every 2 bedrooms in the houses that they flip.
Rudy in LA will go over schedule and over budget to make sure that his homes are worth the price and of the highest quality. Most people who flip houses are in it for the money. They think about the bottom line, which is the total profit at the end of the flip. Every day that flippers go over their schedule is another dollar that they go over budget. However, how thin is the line between the bottom line and a good quality home?
In addition to the purchase price of the home and the cost of renovations, flippers must also factor in the additional holding costs such as utilities, interest on the loan, and the price of building permits. Flipping houses is only one of Rudy’s jobs; he also owns some successful LA restaurants. Rudy focuses on the exterior living space for sunny California living.
Do any of our DINKS flip houses? If you do, would you sacrifice the quality of a home to make a larger profit?
In the last episode I watched Rudy buy a house for $270,000 and sold it for $417,500. He was 4 months over schedule due to weather delays and home inspection permits. But at the end of the day Rudy still made a profit; maybe not as big of a profit as he had planned, but nevertheless he still made a profit.
The selling tactic that sets Rudy apart from the other personalities on A&E’s Flip This House is the fact that he also acts as the Real Estate Agent. Rudy sets up a potential buyer at the beginning of the flip and keeps them updated throughout the whole process. This eliminates the possibility of not selling the house once it is finished and on the market.
Many long-term real estate agents get their real estate license online for more benefits. Having a license will allow you access to MLS without having to rely on other agents. Many investors realize that every time they sell a house through another agent, they are spending about 6% of the sale price in agent commissions. What they don’t realize is that when they buy property, their agent is also collecting up to 3% for facilitating the transaction. Being your own agent on deals could earn you lots of extra money. When you pursue your real estate education with stateCE, you will be able to work and learn at a time that is convenient for your schedule.
The Pros of Flipping Houses
- There is always a demand in the housing market, people are always moving and upgrading.
- There is a lot of money to be made in the business of flipping houses.
- No two days are ever the same. No one who flips houses can say that they have a boring or repetitive job.
The Cons of Flipping Houses
- The house may not sell when finished which can lead to additional holding costs and interest payments.
- We have to rely on several different trade workers such as flooring experts, plumbers, as well as roofing specialists. It can cause delays in our schedule depending on everyone’s availability.
- It may be difficult to get funding from banks on the properties.
If flipping houses was easy then everyone would do it; and if it wasn’t profitable then no one would do it.
Photo by Jramspott