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How real are house flipping and home improvement reality TV shows? Although a great source of entertainment and inspiration, DIY television shows should be just that. There’s a lot going on behind the scenes, and a lot that isn’t said. Let’s debunk a few myths and pinpoint what flipping and home improvement shows don’t tell you about the real deal.
Their Budgets Are Unrealistic
With the help of the show’s expert, a lovely couple buys a large fixer-upper for next to nothing. It needs an extensive demo and to be remodeled from top to bottom. Projected renovation budget? About $35,000. Where do I sign?
Budgets from DIY television shows are not realistic. Some costs are heavily discounted or not accounted for at all. Some renovation shows don’t charge the homeowners for labor, even though we see a large crew hard at work. Other times, contractors agree to work at a discounted rate since they are getting advertising and television exposure.
When it comes to materials used for renovations, prices are also not as they seem. Some supplies are donated in return for on-air promotion. In the final reveal, homes are often staged, with the furniture, window treatments, fixtures and accessories not being included in the budget.
Before undertaking a major renovation, take the time to create a comprehensive budget. Include all material, labor and carrying costs. Most experts recommend adding at least 20% to your overall projected costs to cover unexpected expenses.
It Always Takes Longer Than You Expect
Flipping a house takes time. From beginning to end, the entire process takes much longer than shown on TV. Finding an appropriate house can take months, as can bidding and closing on a property. It’s quite common to have a closing date of 30 to 60 days out, since it takes time to process the title work and secure a mortgage.
DIY shows skim over the preparation that must be done before a renovation can start. Building permits are often needed and building plans must be approved, which can be a lengthy (and costly) process. Site visits are generally required by the municipality. Structural engineers, electricians and other specialists may need to make inspections or complete preliminary work before the renovation can even start.
On television, producers fast-track the work, like a training montage in a sports movie. Off camera, large teams of 30 or more contractors may be working 24 hours per day in order to prepare the big reveal. Some work may have been done in advance, contributing to the wonderful new kitchen built in only three days.
In real life, expect a renovation to take weeks or months, not days. If flipping a house, it may take many months to complete the work.
You Can Over-Renovate
Yes, you can over-renovate a home. A television show may feature a couple who buys a home for $80,000 and spend $40,000 flipping it, hoping to now resell it for $160,000. But if houses in that neighborhood sell for about $100,000, they have grossly over-renovated their home.
Similar scenarios routinely happen when renovating rental properties. What they don’t tell you is that the apartment may have been renting for about the same amount before the costly renovation. Each neighborhood attracts a certain clientele, which expects prices to be aligned with other properties on the market. You never want to have the most luxurious house on the street since you’ll have trouble selling it for the price you need. If you have the most expensive rental unit in the neighborhood, it will be very difficult to lease.
Making Money Isn’t Fast or Easy
It’s difficult to make money flipping properties. It takes time and hard work to renovate or flip an entire house. It also requires money upfront for the house purchase, materials and labor. Carrying costs, such as mortgage payments, insurance, taxes and utilities are another consideration. How much will it cost you to complete the work? How long will it take to market the property to a buyer or renter? How much will you pay in real estate fees?
It’s getting harder to find suitable houses for flipping, as foreclosures have ebbed and home appreciation has slowed. Profits are shrinking, leaving little margin for error. It can be done successfully with the right property, but crunch your numbers first.
Don’t Forget It Was Made for TV
Home renovation shows use a liberal dose of creative licensing in order to make their shows TV-worthy. Scenarios are exaggerated, and storylines are created to hold the viewers’ attention. Conflict and tension is often staged. Don’t forget it was made for TV – when it comes to flipping and home improvement shows, learn from real-life mentors who have achieved success, not TV producers looking for ratings.
Related Reading:
Renovation Investing Tips, Tricks & Cautionary Tales
Case Study: How I Earned a 29% ROI on a Deal I Found on the MLS
Planning to Buy a Fixer-Upper? Proceed with Caution
