Flip That House review

Many of the people that have viewed my Cheektowaga property have made some comment about the TV show "Flip That House". I had never seen the program before, primarily because I had never had more than basic cable service before (and really didn't have time to watch TV). Recently, I had upgraded and now can see A&E and I got a DVR, so I recorded the program Saturday and watched it before bed last night.

To me the show did not jibe with the reality that I have been confronted with while trying to flip a house. For starters, the flip was in San Antonio TX which is a far cry from Buffalo NY - the area is growing in population! [I have never lived in an area with population growth :( ] So the idea that I could buy a house and make $95K was so unrealistic to begin with.

I have yet to find a house where I could afford to purchase and hire the job out completely as well. Contractors in NY have such high costs that they charge much more than the national averages for jobs (as estimated by RS Means), so I am forced to do a lot of the work myself. This adds time to holding costs since I cannot work full time and complete a rehab in 21 days.

The other problems I saw with some of the estimates:

• Purchase price was shown at $260k but no acquisition costs! It usually costs me several thousand dollars to get a property. The one I paid $5k cash for still cost me $3000 to close - it must be awfully cheap to close a property in Texas!
• Holding costs - the investor had $260k purchase price and $45k rehab costs but the show never did mention holding costs. Maybe it sold in 10 days and he only had one month of holding costs. Here it takes 2 months to close a property and average time on the market is 3 months - that's $12.5k in holding costs in interest alone (assuming 10% interest), not to mention taxes, insurance, utilities, etc.
• Selling costs - it looks like this guy does FSBO through his company but I think that may only work in hot markets. No mention is made of commissions or closing costs.

The other part of the show that I disliked was that there was no closure. Did he really sell the house at his estimate of $385k??? We'll never know so the information to me was totally worthless.

On the plus side, the show did put in a great plug for a certain counter top product which I do R&D work on.

Update: I've since watched several episodes of this show and my initial impressions have not changed. Every flip is in a prospering area of high real estate growth rates which makes it easier to flip at a profit, the "flippers" all seem to go over time and monetary budgets, which would cause them to lose money in a market like Buffalo. Selling costs are ignored and no indication of the ultimate outcome is given. Basically, this show is crap for a serious investor.