Enthusiasm for flipping, the practice of buying property to renovate and sell at a profit, is surging — partly because of the popularity of scrappy, do-it-yourself flipper shows on TV. But reality rarely measures up to reality TV.
Watch enough HGTV and flipping houses starts to look easy.
Just talk to Joshua Levitt, who spent the better part of 2014 sitting on his couch in South Orange, New Jersey, watching shows like “Flip or Flop” and taking notes as the charismatic stars frenetically bought distressed properties and, with the right mix of anxious looks and Carrara marble, successfully flipped one by the end of every episode.
At the time, Levitt, now 41, had recently sold his tech company and was taking care of his wife, who was on bed rest with a difficult pregnancy, and their toddler. He had no background in real estate, design or construction, yet watching all that television convinced him that he could make big money buying, restoring and reselling dilapidated properties.
Then a neighbor introduced Levitt to his brother and sister-in-law, Graham and Krista Blundell, who were flipping houses in the area. By April 2015, Levitt was at an auction with Graham Blundell, 44, who previously worked in investment banking, bidding on a vacant house in South Orange.
What you need to know
A few weeks earlier, Levitt had tried to gather information about the property, driving past it after a snowstorm to see if the mail had been collected and the snow had been shoveled, or any other evidence that someone might still live there. He peered in the window and saw standing water in the basement and piles of trash and belongings scattered inside.
“It was like a combination of ‘Storage Wars’ and ‘Flip or Flop,’ ” Levitt said. “It was a disaster.”
He and Blundell won the house, paying $318,000 in cash and hiring a locksmith to let them in. And so, with a cashier’s check and a leap of faith, Levitt joined the growing ranks of small-time real-estate investors who model themselves on spunky TV personalities.
Enthusiasm for flipping, the practice of buying property to renovate and sell at a profit, is surging. In 2017, Americans flipped 207,000 single-family homes or condos, hitting an 11-year high, according to ATTOM Data Solutions, a real-estate data company. And real-estate brokers, designers and contractors credit the popularity of reality TV, specifically scrappy, do-it-yourself flipper shows, with encouraging this new generation of investors.
“There are definitely more people interested in flipping because they watch these shows on HGTV,” said Elizabeth Kee, an associate broker for CORE real estate, who frequently works with buyers of investment properties and now regularly fields calls from people with no real-estate experience who are interested in investing.
Home-improvement shows have for some time played a role in America’s relationship with real estate. After the housing market collapsed in 2008, HGTV was criticized for fanning the flames of an overheated market, encouraging a culture of rampant investment that contributed to the eventual bust. Today, the cable network is among the most popular on television, reaching 1.11 million viewers in May.
But as alluring as house flipping may be, reality rarely measures up to reality TV.
Levitt and Blundell sold the South Orange house in February 2016 for $650,000, making an $80,000 profit. Their next purchase, of a $196,000 four-bedroom in Bloomfield, New Jersey, did not go nearly as smoothly. They underestimated transaction fees and financing costs, walking away with only $20,000.
The shows “make it look very easy,” Levitt said, pointing to deceptively short timelines and unrealistic cost estimates. Where a show might describe a six-week renovation schedule from start to finish, the real world moves at a slower pace.
“You could spend four weeks with an architect before you even get started,” he said. “Then you have to pull permits and that can take another month.”
Most Read Business Stories
- T-Mobile's brash CEO sprints to top of best-paid leaders at Pacific Northwest companies
- Boeing faces largest quarterly loss in its history after a $4.9 billion financial hit due to 737 MAX grounding
- Northwest CEOs saw a lopsided bump in equity pay
- Runaway executive pay is distorting the economy and aggravating inequality | Jon Talton
- Toys R Us is back from the dead, but its new stores are unrecognizable
During that time, an investor is paying property taxes, insurance and interest on a mortgage or construction loan.
Chip Wade, a carpenter on HGTV’s “Designed to Sell” and “Curb Appeal: The Block” and a Liberty Mutual consultant, describes the information gleaned from these aspirational shows as no more useful than what you might find on a Pinterest board.
“You’re not seeing pricing. You’re not getting full spectrum of the process,” he said. “You’re looking through a very small lens.”
Three years into his new career, Levitt said he has gotten better at minimizing his expenses.
If anyone should understand how far television often is from reality, it would be the producers of home-improvement shows — the ones who spend months following celebrity flippers around with a camera, setting up the drama and delivering the Big Reveal, the moment when the homeowner gets to see the ugly duckling re-emerge as a beautiful swan.
But having that insider knowledge didn’t dissuade Max Weissman, whose production company, Departure Films, produces shows like “Flip This House” for A&E and “Vacation House for Free” for HGTV, from getting into the flipping business.
In 2015, Weissman enlisted two Departure employees, Timothy Robbins, 52, an executive producer, and Jennifer Di Lullo, 40, a senior producer, to help him start a new venture off screen. Di Lullo left her television job to become the project manager for the houses that Weissman would buy. The first, a five-bedroom in Maplewood, New Jersey, lost money. The next three netted between $10,000 and $20,000 apiece.
“I certainly thought it was going to be easier,” said Weissman, 51, sitting in the living room of his latest investment, a seven-bedroom colonial on the market for $1.7 million after a gut renovation.
Weissman bought the dilapidated house in November 2016 for $710,000, invested more than $700,000 in it and hopes to net a six-figure return.
Renovating the 6,500-square-foot house has been an enormous effort. Di Lullo has 12 spreadsheets for the 1912 center hall colonial that now has five full bathrooms, two half baths and a chef’s kitchen with Calacatta quartz countertops.
“It’s hard to remember we aren’t doing this for TV,” she said, surrounded by upended furniture that arrived earlier in the day for staging.
For television, producers need to finish only what viewers will see within the frame.
For one episode that Departure Films produced, the crew painted just two sides of the exterior of a house to get the perfect shot. (The owners didn’t like the color and planned to repaint it once the filming was done.) But when you are listing a property for sale, everything down to the outlet covers needs to be done before the open house.