First, Do What You Love

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I’ve had many a conversation with people who believe that they want to step into real estate investing, and the topic of “why” ranges widely.  Many people have seen the shows on HGTV, read Rich Dad, Poor Dad by Robert Kyosaki, or otherwise have been exposed to this real estate thing and got interested.

There’s a real problem with finding what you want to do in your life on T.V.  Realize that the very first priority with a television show is to generate viewership and, hence, advertising dollars.  When that show happens to be one about rehabbing or, as they call it, “flipping”, things can really go sideways.

Real life often does not make for the best television viewing.  For example, talk to health care professionals and ask how much of the T.V. show “Grey’s Anatomy” reflects the real world.  Often, eyeballs will be rolling upwards.  Staff at Grey Sloan Memorial goes through more of their own trauma than they are servicing.  And it makes for great television – I am an admitted addict myself.

So, what’s “off” about the HGTV rehabbing shows?  Well, they only show the three most exciting things about a rehab:  1) an awful distressed property, 2) construction that goes smoothly, usually done by one star of the show (Chip Gaines comes to mind), finished on time (yeah, right), and 3) a completed project that blows your mind.  Throughout, they find points to add extreme drama, like when the mold is detected, or they need to add a $5,000 furnace -  the music gets ominous and we break for commercial.

Oh, and they always seem to net about $70,000.  “On to the next one”, the star barks.  It’s no wonder half the country thinks they can do this stuff and be a millionaire in under a year.  What you don’t see is the dozens of regular craftsmen and trades that descend on the property off-camera and do the work in a day that would take Chip over 6 months to do alone.  And have you ever seen one property that is not shown gloriously decorated and staged?  No, you have not.

As for cost, most of it is underwritten by HGTV sponsors like The Home Depot and other big-box stores and suppliers.  If Chip utters “go to Home Depot and pick that up”, it’s worth tens of thousands to them.  And most of these shows are not HGTV productions – they are massive advertisements PAID FOR by the stars’ production companies, because at some point, they will send their minions out to the Sheraton in Madison to sign you up for coaching to do this rehabbing yourself, “as seen on TV”.

Reality in this industry is far more boring.  Acquiring properties at the right price can be difficult, rehabbing can be challenging (don’t get me started on dealing with all the trades), and the finished product, while usually pretty great in comparison to the start, doesn’t blow your mind and cause potential buyers to wet their pants.  And, no, Joanna Gaines is not coming to decorate.

All in all, it’s still a rewarding business to be in, if you enjoy aspects of this stuff.  You can generally hire out those things that are not enjoyable, and tailor your own personal involvement to fit your needs.  If you are crazy enough, every so often you can strap on the tool belt and do some of the work yourself.  I do this every so often when the memory of the last project I worked on has faded.

You can also make a good living from it, and the nature of the work gives you a lot of flexibility in your schedule.  It takes someone who is self-disciplined and will get up every day and do what needs to be done.  Sitting on the couch eating Bonbons and watching Oprah is not the best use of your flexible time.

So if you’re someone kicking the tires about this, hang out at the REIA more, ask questions and maybe even come to our first property tour to get a live taste of things.  We’ll help you figure out if this is a good match for you.

 



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