It seems like every time I turn on the television there is a new "reality" show about real estate. There are a couple of shows that stand out as shows dealing with buying run-down properties, fixing them up and then selling them for a profit. If you haven't already guessed, I'm talking about Flip This House on A&E or Flip That House on TLC. Both of these are usually excellent entertainment as I find myself anxiously waiting to see if they are going to make the deadline or keep it under budget or how much money they make.
Notice I used the word "entertainment". That is because that's what they are. These shows should NOT be used as guides to investing in real estate. I talk to more and more people who say "I'd like to start investing in real estate". I normally respond with "Great. Real estate can be an excellent investment. Have you put together a plan or strategy yet?". Then I normally get "Plan? Well no, I haven't really thought about it." This is a problem.
Flipping houses is only one of the ways you can invest in real estate. There are numerous others. Flipping can be very rewarding if done correctly. One problem that we face here in Kentuckiana though, is that we don't live in the type of market they portray on TV. The money you put into a house here will not get the same return as it would in California or on the East Coast. I'm not saying opportunities don't exist here, because they do. There just aren't as many and you need to be very careful choosing which properties you're going to flip.
Flipping houses is a business, not a hobby. One thing the shows do portray is that the most of the people doing the flipping do this for a living. Well, the serious ones anyway. The first season of Flip This House featured a businessman in South Carolina, Richard Davis, of Trademark Properties. This is a full-time full service real estate company. Flipping houses is their business. It's what they do. They have a plan and a strategy.
As I said earlier, flipping houses can be very rewarding if done correctly. All I am asking is that you look past all the glitz and glamor (like Richard flying away in his helicopter) and focus on the reality, hard work.
Edit - Kaushik Sirkar wrote another blog that pertains to flipping and how the market has changed. Check it out.