Prospective house flippers, be warned: the reality of the business is much tougher than it appears on reality television.
The popularity of buying properties to renovate and sell at a profit is steadily increasing, and many people in the industry credit this to reality shows about the practice on networks like HGTV, according to the New York Times. In the New York area, flips made up 5.6 percent of sales in 2017, a 29 percent increase from 2016, and throughout the country, Americans flipped 207,000 condos or single-family homes, the highest number in 11 years.
But when people actually start doing it themselves, they can find it extremely difficult to make a sizable profit and get the house ready to sell.
Joshua Levitt and Graham Blundell, for instance, entered the house flipping market in 2015 and were able to make an $80,000 profit selling a house in South Orange, New Jersey. However, their next purchase of a four-bedroom home in nearby Bloomfield was much more challenging. Thanks to transaction fees and financing costs, they only made a $20,000 profit off of it.
“You could spend four weeks with an architect before you even get started,” Levitt said to the Times. “Then you have to pull permits, and that can take another month.” [NYT] – Eddie Small