It’s Fake
The TV flipping genre is no longer new, and neither is its formula. No, TV Flipping is not real, but man has it proved resilient. Invariably geared toward the novice, they carry a lot of weight in the ‘flipping for beginners’ category of investors.
Just think about how many of these shows’ stars run seminars? Or celebrity magazines that emblazon them on their covers, month after month? There is an audience for sure, or it would stop.
So What?
Who cares? Well, I do for one. This is not an easy line of work. The fact that TV flipping is not real is more than just an affront to viewer intelligence.
It is also a disingenuous message from these programs’ stars. Their actual source of revenue (show royalties, seminars, appearances, etc.) do not appear to align with the message conveyed (success through real estate development and flipping).
But apart from my bruised ego and questions of revenue, what is really problematic is people using the shows as a measuring stick. Binge watching your favorite cable TV flip series will not aid you in this business. But relying on it can set your wallet back quite a bit.
Bread & Circus
The Roman Emperors used bread and circus – literally free bread and free gladiatorial games – to keep the masses entertained and compliant. I’m not saying these shows are quite that jaded, but…
The problem is simplification for editing and entertainment. These programs streamline the property game in a way that is a risky disservice to the financial health of entrepreneurs considering entry into this business.
Remember. It’s got to fit into a 40 minute slot with 20 minutes of commercials. Something has to end up on the editing room floor.
More than a few of these amateur (and even professional) flippers are very casual about the business end of things. They spend money on trivial improvements or the wrong improvements entirely
Yet, week in and week out, they (apparently) still end up extremely successful. That is because it is likely that both the staging of issues, and general scripting of TV flipping is not real either.
The Real Reality of Reality TV
As you watch, be ‘mindful’, as we often hear in this age of self-awareness. One approach I recommend is to pay attention to ‘gaps’ in the show. Those gaps take the form of some major setback that isn’t a show stopper.
Have we just uncovered what would be a major issue if you had to tackle it? In fact, imagine it is YOU that has to tackle it. Can you?
Has it been introduced as a commercial segue to keep you coming back? Then only to be addressed in a mere 10 minutes without any detailed steps? You have your answer. Phony solution. And an unintended learning opportunity.
How do you avoid learning the wrong lessons? For starters, read as many articles and books on this subject as you can. There are plenty available (on this website and elsewhere).
Here’s an older One that’s still relevant today. I will save you the read though. The main takeaway for our purposes is this quote:
“An analysis RealtyTrac ran for MONEY showed that 12% of flips sold at break-even or at a loss before all expenses. In 28% of flips, the gross profit was less than 20% of the purchase price. Twenty percent is typically the minimum that would at least cover rehab costs, carrying costs, and other expenses incurred by the flipper…”
Remember, a lot of the information we provide is not simply based on success…but also on failures. Learn from others rather than learning by doing, when possible.
And of course, consider your strengths and weaknesses, vet properties carefully, and tailor your strategy to your own circumstances. You know yourself better than anyone else.
So in conclusion…
Align: Skill – Need – Risk
Align your skills with the project need. Then factor in the risk of doing it wrong (cost or safety).
Balance all three of these important factors together. Satisfy the project need with your skills. Do that while complying with the risk inherent to each project. The successful outcome will be improved homes, saved money, and boosted margin by doing it yourself, while doing it well.
Watching these shows with a keen eye for the unrealistic, will help you learn a bit about your own abilities and limitations. And knowing your skills will guide future target selection, and the type of improvements you will consider, before spending a dime.
You will understand your risk profile a lot better. The benefit of that is self-evident when we are talking about any investment.
In the end, if you follow this general advice, it is more likely you’ll be FAR ahead of the many others who will stick to the popular flipping reality gigs and emulate their techniques in the flipping business. And if nothing else, just remember that TV flipping is not real, and never was.
Note, in The Pessimist’s Guide, we run through a self-assessment for flip skills.
It’s unscientific, but based on experiences in the field.
Read More – HERE –