The downsides to flipping houses

All the money and investing writers love to brag just how much money they made flipping houses. They make it out like it’s so glamorous, like yachts and supermodels.

Well, I’m here to tell you the truth, because you deserve to know the truth. It’s not as easy as they all make it out to be.

Here are some of the downsides to flipping houses

It’s a lot of fucking work!

“Gee, nobody ever told me how much work it would be!” That’s why I’m telling you right now because everyone else is trying to sell you something. They’re either trying to sell you their book or their seminar.

Look, I got over a million in net worth, but it’s all tied up. Most millionaires don’t have a million in liquid cash. It’s not all glamour and fun and games. You’re busting ass like you’ve never busted ass before.

Every two to three years, we’re moving. That means physical labor, moving trucks, boxes, and storage companies making a lot of money off of us. I’m not going to stuff everything I own onto a friend because I’m not an asshole.

We got storage people in several cities who know me because we move so much. Do not underestimate just how much work this is. If you do, you’ll surely burn out.

You need to have both a good eye and good timing

Sometimes, you time the market wrong and you’re stuck in a house that suddenly lost six figures in value and you can’t get rid of it because nobody wants to buy it. No, that’s not an exaggeration. You’ve just lost over $100,000 on paper, and you can’t move. You’re stuck in it.

The big lie in real estate is that it’s all about location, location, location. Bullshit! It’s timing, timing, timing. Time the market wrong and you’re fucked. Of the biggest downsides to flipping houses, this is quite possibly the most significant. You’re doing this to make money, not lose money.

So develop your eyes. And develop your timing. Both come with time. You mainly need to remember that you have to be able to make payments. If you have a negative cashflow, you should have never pulled the trigger.

I can tell you first hand that there is no stress comparable to significant credit card debt. It’s not a horrible stress like finding out your loved one has cancer. But it’s a bang your head against the wall and feel helpless stress. You don’t need that in your life.

If you’re not living in the house, prepare for tax hell

If you’re actually living in these houses like we sometimes do, then this point is irrelevant. However, if these houses are rentals, you better have a pretty good accountant. Prepare for tax hell.

You will quickly learn that tax software sucks ass and so do cheap accountants. My accountants cost me $3000 a year. They’re worth every single penny.

I did something stupid a few years ago. I started to do my taxes myself because I thought I could handle them. Well guess what? Now I owe back taxes to the IRS and have to make payments.

Stupid, stupid, stupid. Don’t make that mistake. Don’t skimp on lawyers and don’t skimp on accountants. I sincerely hope you don’t learn that the hard way like I did. (I’ll be rehiring my old accountants and buying them some pretty fucking nice bottles of wine next year).

You’re going to exhaust your family

And last but by no means least, you’re going to exhaust your family. My son’s currently in the military but I know in high school, he wasn’t too happy about moving. The story had a happy ending though as we made sure he stayed in the school he wanted to stay in.

As for my wife, she’s like me. I was born to be a rock star. I don’t mind not having a permanent home. She and I are both more concerned with making the big money than stability. If your family loves stability, you’re going to drive them crazy.

So those are the biggest downsides to flipping houses. And by no means did I exhaust the list. There are more issues, but these are the ones that came up with me and my investment partners the most.

I hope I didn’t scare you

Now, I strongly think that if you can stomach all that, you should flip properties. There’s more than one way to make a million. You’re better off with multiple attacks, as you’ll have years where you’re on the defense.

Old timers totally know what I mean and if you’re young and inexperienced, you’ll soon find out. I’ll quickly explain. You’ll have years where things go wrong, really wrong. The market will suddenly turn on you and you’ll lose your day job, then the contacts you had for backup day jobs also got laid off. A perfect shit storm. This stuff just happens.

Don’t worry, it won’t kill you. Stay strong and ride it out. Years later, you’ll laugh about it. Like I think it’s funny how I lost about a third of a million in just one year. That would freak out most people. It freaked me out at the time. Actually, it got me pretty fucking depressed. But you know what? We made it all back on the upturn.

So when it happens, ride it out. You’ll live. And believe me, the ride will be worth it when you start seeing gold at the end of the tunnel.

And when you get the gold at the end of the tunnel

You can tell anyone to go fuck themselves because you got the money to do it. Then, you realize what’s really important in life. My wife, my son, my closest friends, and my band – Astral Eyes.

I had totally forgotten I took this picture of Jin and Kristy holding my guitar and Skitz’s guitar respectively. I think it’s cute. Click on the picture and you’ll get to our latest music video which those girls starred in. It’s my favorite song I’ve written so far. I sincerely hope you like it.

Astral Eyes Darvulia & Bathory

Jin & Kristy

About

Roman is an artist, composer, writer, and travel junkie.

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