You've seen it on TV thousands of times. Flip this house. Flip that house and so on. It's been all over television for the past few years. At the same time you've been getting postcards in the mail and seen advertisements in the newspaper to attend the seminars that will teach you how to do it. You've probably been to at least one of those seminars as I think half the country has.

They sure do make it sound easy don't they. And it sure does look easy on TV. Most of the time anyway. They buy a home for pennies on the dollar. Call up a bunch of guys and a few weeks later you've got a brand new home worth a hundred thousand dollars more than you paid for it. Take out the fifty thousand it cost you for the work and after having one open house you've sold it and put fifty thousand dollars in your pocket.

Then of course there's the couple's, usually husband and wife who do all the work themselves. They budget twenty thousand dollars for the materials and about 3 months for the week and it ends up costing them forty thousand and taking six months. Interesting enough, they still 'profit' sixty thousand. Of course, it's never revealed whether that profit takes into account the six months of mortgage payments and the sales transaction costs. I expect their profit is closer to thirty thousand.

Still not bad right? What there not showing you is the dozens of others who were followed around by cameras and who ended up losing their shorts, or if they were lucky, got to work for free for six months and break even. What is also not shown on the programs and in the seminars is that most of the markets where the flips were successful the markets were appreciating at double digit paces, so no matter how bad your numbers, you were still destined to make a profit.

What's not reported is that those who make a reasonable profit at the fix and flip game are very few. And, there are only certain markets that will allow for it. For instance, the opportunities in Charlotte, NC are much different than those in Colorado Springs. Those markets not in double digit appreciation have a much more difficult time profiting from flipping.

There are a number of factors you must account for when analyzing a property to flip. When looking at a property (and most likely you're looking at a single family home) you need to start by determining what you can sell the home for when all the work is done. Take that number and subtract how much it will cost you to do the work materials and labor, even if you're doing the work yourself. Remember, always pay yourself for whichever role you're in. You'll be wearing many different hats and your time is valuable and you must be paid for everything.

Then subtract your financing and carrying costs. Everything from what it cost to take out a loan to the mortgage payments you'll make to utilities and taxes. Then subtract your sales costs. Everything from commissions to marketing expenses to title insurance. Subtract a variance of about ten percent because you're numbers are not always precise and this is the maximum amount you can afford to pay for the property.

This is where most people fail. They either start from the bottom and work their way up. Meaning. They just pay full price for the home, add on their expenses and put the property on the market for 'what they need.? This is a formula ripe for failure. And this is why we see so many of these homes still on the market. If a home isn't priced according to market, it just won't sell.

The point of all this is. If you're considering jumping on the fix-n-flip bandwagon, do so with caution. Make sure you've included all the numbers. Pay yourself as an investor and as labor. And, solicit the advise of a real estate professional. The few thousand dollars it may cost for their help is like insurance against losing tens of thousands of dollars. If not more.

Until next time, you can find me at http://roseusa.com

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