I have watched a few episodes of DIY Network new show “First Time Flippers“. It is a show about ordinary people who decide to try flipping houses for the first time. One recent episode showed two buddies with very little experience who are laid off at work and decide to flip a house. Another showed a mother and son who decide to flip. I was shocked to see some of the programming which in my opinion is pretty unreal for a “reality show” and also shows some of the dangers in buying a flipped home.
Closing Costs To Buy
The shows say what the team paid for a home but they don’t reveal if this price includes closing costs or borrowing costs. I have not seen it explain what funds were used to pay for the home and the renovations.
The shows give a time line like 3 months or 6 months to do all the work when flipping houses but they never discuss insurance. My experience tells me it would be very difficult to get insurance on a vacant home that is experiencing renovations. It would definitely be more expensive than regular home owners’ insurance if it was available at all. Farmers Insurance discusses vacant home insurance on their site and offers special categories of insurance for this situation. I would advise those considering flipping houses to protect themselves with proper insurance.
Permits & Inspections When Flipping Houses
Most incorporated areas require permits to do renovations including things you might not consider like replacing a water heater or patio. Many villages and cities require all contractors to be registered with them and a notarized letter of intent when a home owner is doing their own work. Obtaining permits can mean inspections and requiring work to be brought up to code. This can be extremely expensive in some cases. I have not seen an episode of the show that discusses permits, inspections or codes in any of the homes they were flipping.
Dangers For Buyers
The shows alerted me to a danger for buyers of homes that were flipped by amateurs that I had not considered. In both episodes I watched, the inexperienced flippers took out a load bearing wall and shored up the space with a beam they considered adequate. But they were just guessing it was adequate. This could result in sagging and serious structural problems in the future for the buyer. Flipping houses with work on load bearing walls, foundations, drainage and other situations may require engineers, architects and other professionals with specialized knowledge. Buyers of homes that have been recently flipped may be in danger of serious costs caused by people flipping houses without the proper knowledge.
Unrealistic Open House
In both episodes I watched, the house flippers worked toward an open house that they hoped would sell their home. This was, in my opinion, very unrealistically shown. As a Realtor who does a lot of open houses, I can tell you that open houses are a great way to attract buyers but most end up buying homes other than the one that is open. It takes lots of contacts, letters, lots of social media marketing and more to have a successful open house. I don’t believe people flipping houses for the first time being able to have successful open houses.
Cost To Sell
When one of the homes is sold, the show tells viewers how much the home was sold for. However, it doesn’t disclose any closing costs and these can be substantial when flipping houses.
The shows concludes showing that the first time flippers made a very large profit on a few months work and makes flipping houses look like a great way to make a living for anyone. My experience is that flipping houses can be a good way to make money if you have the money to buy, hold and renovate and/or you are a Realtor and/or you are a contractor.