I know it’s your guilty pleasure. It’s ok, we all watch them too. It seems like you can’t turn on 2nd Tier Cable Channels anymore without seeing someone flipping a house. Whenever I tell someone I’m an investor, their first response is ‘oh, kinda like that one tv show’. Yeah, kinda like that. HA! To this date, I’ve only seen 2 episodes that were filmed here in AZ- and those were during our boom. If you pay close enough attention to those shows, you’ll notice that the majority of them are filmed in either California during a rising market, or in the mid-west. Let’s talk about these 2 sceanarios…

Yes, in California when their market is rising, it was somewhat easy to find a deal for $500k, throw money at it, let’s say oh, $120,000, and sell the thing for $900k. Not a problem. Kinda like buying a home here in AZ during our boom and flipping it for $50k higher a week later. What cracks me up is that the beginner investors act soo surprised when their REALTOR® tells them how much their flip is now worth. - DIDN’T THEY KNOW THAT BEFORE THEY PUT MONEY INTO THE THING? Oh, how nice it must be to live in the promise land. I would guess that if you talk to any California investor during their down cycle, they would paint you a different picture. Funny how the networks don’t air episodes in those times, huh?

Let’s look at the mid-west. Ahhh- the beauty of picking up a home for $40k, throwing $20-30k into it, and selling it for $250,000+. Well, believe me, it’s never as easy as they make it look on tv. You’re cramming months worth of hard work into 42 minutes of air time- they’re bound to skip a few details. I’m not saying it can’t be done, there’s just a ton of details left out of the process.

One thing’s for sure- you can’t pick up a house for $40k, throw $20-30k into it and sell it for $250-300k+. At least, not in this market. The mid-west doesn’t have subdivisions like we do here, and subdivisions dictate your comps and values. I always wonder who is buying a $300k house right smack in the middle of $40k dumps? That just doesn’t happen here in AZ. If you pay attention to the shows now, they quickly end the show with their ‘Potential Profit’ if they sell the house for the projected amount. There’s no discussion of holding costs, closing costs, employee costs, etc. 2 years ago we knew how many days it took to sell, the final sales price, closing costs, Agent’s commissions and net profits. Now we’re swept away with ‘potential profits’ and ‘what-if’ scenarios as the closing credits are rolling across the screen. Funny how things change right under our noses. It’s still pretty glamorous when you don’t notice the little details, huh?

Oh, and I love the 10-15 minute product placement segments on every episode now. Not only do we get a guided tour of the factory, but typically an installation demo with plenty of brand name placements all over the scene. Usually it’s the owner or CEO himself. Man, I wish the CEO of Pella Windows would come install in my next flip. I wonder what those companies pay to place their products on the show? More importantly, what’s the Investors’ ROI when their material and labor costs are paid for by the product placements? Flippin’ Awesome, that’s what. Please don’t misunderstand- I certainly respect these shows and the Investors featured in it- I believe they’re brilliant and successful investors, to say the least. I just want to point out the differences on tv and here in AZ.

This is not to say that it can’t be done. I just flipped a house myself in Tempe 2 months ago. I sold it in 2 hours- yes, 2 hours. Did I sell it for full market value? NOPE- about 95%. Was it the nicest house in the neighborhood? Yup- only one in the area with a slate walk-in shower, hardwood floors, granite counters and completely modernized inside and out. Did I profit from it? You bet I did. I’ll give details in another post some other time. The point is, if you watch those shows on tv, and think you’re ready to play ball here in AZ- you MUST be prepared. It’s different than what you think. You better be on top of your numbers, offer the nicest house in the neighborhood for the cheapest price, and factor in extra long hold times before calculating your potential profits. It certainly can be done, but not like it is on tv.