Reality of flipping homes

Jim Porter

Solano Real Estate Scene: Jim Porter

Article By: Jim Porter – March 1, 2024

I am a “Blue Bloods,” “Law and Order,” Investigation Discovery, NFL football, “Fargo” and “Chicago PD” kind of TV guy. I never watch reality shows like “Housewives,” “Real World,” or “The Bachelor,” but occasionally I enjoy watching some of the house flipper shows.

The before-and-after videos of the dumpy house before and the sparkling gem of a home after the renovation are amazing. Some of these flips are fake and some are real. These reality TV shows make it look easy to make money while having a lot of fun.
The reality is that making a living doing flips is incredibly difficult and takes a lot of hard work. Some flips turn into financial losses.

A professional flipper must find sellers that are willing to sell for a price that will produce a profit after the cost of financing and renovation. This requires advertising and marketing expenses because there are a lot of competitive investors – big national ones, and small local ones – out there promising to buy your house in as-is condition and have the money in your pocket in seven days.

Once a flipper wins the house and gives the seller the money, they then need to prepare the house for sale. This might mean helping the seller move out of the house and in some cases finding a place for the seller to go and live. Cleaning the property and removing tons of junk, debris and garbage is often required.

Once the house is vacant and cleaned out, now the construction begins, and although the professional flipper may be a contractor, or has a trusted contractor that inspected the house before the purchase contract was ratified, the flipper may be shocked and surprised to find repairs and problems missed at the inspection.

From 2008 to 2015, 90% of the flipper homes were foreclosed homes. Today, only 10% of all flips are foreclosures, and the number of sellers willing to sell a house for a price that makes sense for a flipper is 90% less today than it was after the crash from 2008 to 2015.

Do not quit your day job to become a flipper without a serious business plan.

Jim Porter, NMLS No. 276412, is the branch manager of Solano Mortgage, NMLS No. 1515497, a division of American Pacific Mortgage Corporation, NMLS No. 1850, licensed in California by the Department of Financial Protection and Innovation under the CRMLA / Equal Housing Opportunity. Jim can be reached at 707-449-4777.

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