Thanks to a variety of TV shows, flipping houses has become a pop culture phenomenon. I have to admit, watching those shows is like a drug. They don’t even show a commercial break in between the end of one show and the beginning of the next, ensuring that they hook you on a never-ending loop of house flip episodes.
But whereas many of us have seen and enjoy shows about house flips, most would say, “I could never do that myself.” Why? Because misconceptions abound and cause confusion on what is truly difficult about flipping a house. Needless to say, most of the objections are not good ones, and most people don’t realize that the average American could flip a house and make money without giving up a ton of money or putting in a ton of work.
So with that in mind, here are the top misconceptions about flipping a house.
- I can’t flip a house because I’m not handy. This one makes me laugh because anyone who knows me knows that it’s a miracle every time I swing a hammer correctly. I am the definition of not handy, and yet I flip houses. How? Outsourcing the work. I use contractors, subs, and handymen – people who can do the work for me. Which leads into the next misconception.
- If I outsource the work, I won’t make any money. Again, I outsource virtually all the manual labor, and I have made money on every flip I’ve done. If you do a house flip and don’t make money, the issue isn’t that you shouldn’t have outsourced the work, it’s that you didn’t buy a property with enough equity. This is why having a knowledgable real estate agent (shameless plug!) who can help you navigate good deals and bad deals is important.
- I don’t have enough money to purchase a house. Guess what? I’ve done deals called “wholesale real estate” (which we’ll talk about another time) where you flip a property without ever even purchasing the house yourself or doing the repair work. You say, “That’s too good to be true.” No, it’s not, but it does take work.
- I could purchase a cheap house but then I wouldn’t have the money to do the repairs. If your credit is halfway-decent there are loan programs out there (called “hard money loans“) to fund your house purchase and the repairs. The interest will be higher, but again, that’s not a problem if you buy a property with the right amount of equity.
- I’m scared of the risk of getting stuck with a house during an economic downturn. I’m scared of being stuck with any investment during an economic downturn, but at least with a house, you have something that people always need. They may not always need the stocks you own, they may not always need (or want) precious metals, but houses aren’t going out of vogue any time soon. They are as safe an investment as you can have.
So what are you waiting for? Let me know if you want me to look for good house flipping opportunities for you.