House Flipping on UK Television - Is it Real?
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Are house flipping (to find, fix and sell houses for profit) TV shows how it is in real life to buy and sell homes for profit?
The answer is that real estate / property TV shows are as true to real life real Estate as soap opera marriages are as true to real life marriages. So, there are definately some commonalities but it is important to remember that it is entertainment television and not necessarily a true life documentary.
Perhaps the most problematic issue with house flipping TV shows are that they always show that if you buy a house for 100,000 pounds, spend 20,000 pounds fixing it up and then sell it for 180,000 pounds, they show your profit as 60,000 pounds.
In actual truth, your profit will not be the entire 60,000 pounds because there are costs that the television show doesn't cover.
So what are the hidden extra costs?
The first consideration is where you got the 120,000 pounds for the purchase and fix up costs? You probably had to to borrow the money... so you need to factor in how much you are paying to borrow the money. So make sure you add in what the upfront costs and interest rate costs are.
Next, you need to consider whether you payed closing costs when you purchased the property, professional fees, recording fees and also taxes.
Next, how long are you planning to own the house from the time you purchased it until the time you sell? You must factor in use of any electricity or water and heat or air conditioning while you own the home.
Insurance costs
You should insure your property (from fire, theft, vandalism, flood etc) and if you're borrowing the money to purchase the house you'll be required to do so by your lender. This isnt just regular homeowners insurance either, because this is a house you will not be living in more than likely.
You must insure a vacant property and you would be extremely wise to protect yourself with some type of "builder's risk" insurance in case someone hurts themselves during any work at the house. Please also check that your contractors are insured.
Are you going to have to pay closing costs when you sell the property? Are you listing the home with an estate agent? Even if you're selling it without a licensed estate agent, there are going to be costs involved.
Then dont forget miscellaneous items like cutting the grass, keeping the garden nice and the snow and ice cleared, etc. etc. etc.
Hopefully we have shown you that the Reality House Flipping TV shows are often far from Reality. Just make sure you add everything up!
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