Over the years, a slew of reality TV shows that glamorize the real estate industry have popped up on networks like HGTV and Netflix. But just how realistic are they?
To find out, we evaluated eight popular shows that may appeal to investors. While most are focused on redesign efforts and fail to consider the practical aspects of investing, a few offer realistic tips and relatable challenges that make them worth watching.
Flip or Flop
Flip or Flop ended in 2022 after airing for 10 seasons on HGTV. The series follows formerly married real estate agents Christina Hall and Tarek El Moussa, who began flipping houses in Orange County, California, after the 2008 real estate crash. They typically make all-cash offers on foreclosures, which they renovate and sell for a profit.
The 70% rule of house flipping is a guideline house flippers use to ensure sufficient profits—it says you shouldn’t spend more than 70% of the home’s expected after-repair value, less any repair costs, on a distressed home. But Tarek and Christina tended to take bigger risks when choosing a property, which is likely to make things interesting.
For example, an episode in the final season, “Red Hot Flip,” shows the duo making a $500,000 offer on a home they hope to sell for $700,000, with quoted repair costs of $120,000. They note that low inventory in 2022 leaves them with few choices.
Several obstacles come up, including necessary repiping, which pushes their repair costs to $140,000. But they manage to get a $856,500 offer on the house because of the hot market, leaving them with $187,025 in profit after closing costs. That’s a 27.9% return on investment (ROI), which is just slightly below the average of 27.5% for home flips completed in the second quarter of 2023, according to Attom Data.
Most house flippers who aren’t also reality TV celebrities might turn away from a project with such slim profit margins, rather than hoping to get lucky with an offer above asking.
Stay Here
Stay Here was only around for one season in 2018 on Netflix, but it’s one of the few highly rated reality TV shows that showcases the optimization of vacation homes for added revenue potential. Designer Genevieve Gorder joins real estate expert Peter Lorimer to help property owners across the country boost their occupancy and average daily rates.
While the show offers some research-backed tips for increasing the cash flow on a short-term rental property, it’s mostly focused on the design aspect. The show doesn’t provide the budget for renovations or ROI.
In the episode “Austin Pool Pad,” a rare pool property in the desirable South Congress neighborhood suffers from old furniture, a sad-looking outdoor space, and a wasted bedroom used as an office. The team converts the office to a bedroom, adds a game room, creates a “social media moment” in the pool area with an eye-catching mural, and updates the listing description with a title to highlight the selling points. They also set up a partnership with a local pitmaster to provide private brisket-smoking classes to guests using the new smoker.
Ultimately, the new listing aims to capture $400 per night—but the episode ends there. Without a before-and-after comparison of monthly revenue for the vacation home, it’s tough to know if the extensive renovations and design updates paid off.
Selling Sunset
Emmy-nominated Selling Sunset is one of the most popular real estate reality TV shows, and it’s not because the show realistically depicts the homebuying process, at least not in most parts of the country. Instead, the Netflix show focuses on relationship drama at The Oppenheim Group, a cutthroat Los Angeles brokerage where the real estate agents carry $10,000 handbags and sell luxurious mansions to affluent homebuyers.
The episodes sometimes include real estate market insights, but they’re often quick and oversimplified, leaving plenty of room for viewers to focus on the attractive real estate agents and the intimate details of their personal lives, from pregnancy test results to backstabbing behavior to new agent gossip.
Investors looking to learn something should avoid this unrealistic reality show. On the other hand, anyone with an appetite for interpersonal drama in wealthy social circles should probably binge all seven seasons.
Buy My House
The Netflix series Buy My House premiered in 2022 and is one of the more investor-focused real estate shows. Homeowners are given the chance to pitch their homes to four expert real estate investors: Redfin CEO Glenn Kelman, football player Brandon Copeland, Corcoran CEO Pamela Liebman, and commercial real estate agent and business owner Danisha Danielle Wrighster. The show offers insight into the investors’ thought processes as they evaluate a variety of investment properties with the intent of making an all-cash, commission-free offer.
Buy My House includes properties at a range of price points from rental markets across the country, including some under-the-radar markets alongside tourist hubs. For example, in one episode, Glenn Kelman offers $170,000 for a starter home in the Detroit area with strong rental metrics, which is $5,000 above asking. But when a couple pitches a house near Disney World for close to $1 million, all four investors pass, pointing out that the price is too high, given the expected revenue.
Newbie investors can definitely pick up some tips from this show, from the nuances of how to run comps to the value of a unique property.
Vacation House Rules
This HGTV show premiered in 2020 and follows real estate and renovation expert Scott McGillivray as he updates vacation homes to optimize their revenue potential. Vacation House Rules mostly focuses on the renovation and design process in detail, which isn’t always practical from a business perspective.
For example, in the season 4 episode “Cottage on a Cliff,” Scott works on a friend’s cliffside cabin that is so distressed that it may be a money pit. The team essentially rebuilds the entire house, with no mention of the cost. While it’s fun to watch the transformation, it probably wouldn’t be feasible for investors who don’t have the budget of a TV show.
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Property Brothers
In Property Brothers, which ran for a whopping 14 seasons, twin brothers Jonathan and Drew Scott assist homebuyers with finding a fixer-upper, making an offer, and renovating the property according to their budget and needs. Unlike some other renovation shows, Property Brothers details the cost of planned updates and unexpected necessary repairs, along with the timeline, and the brothers are cognizant of the family’s budget.
For example, in the episode “Island Getaway,” the brothers discover a termite problem in the house. Due to the added expense, the brothers need to find ways to cut corners in order to remain within the family’s $650,000 budget. Investors who have rehabbed homes will relate to the challenge of staying within budget in the face of obstacles that pop up.
The Deed
This CNBC reality series began in 2017 and ran for two seasons. The Deed follows real estate developer Sidney Torres as he steps in to help other developers get their projects back on track.
For example, in an episode titled “Don’t Fall in Love with Your Flip,” Torres encourages a friend to look at his flip from a business perspective, abandon some of the high-end details, and sell the home for a profit to pay off his debt and potentially buy other cash-flowing properties.
To do this, Torres structures a deal with a penalty clause to discourage his friend from keeping the home. He offers $200,000 to complete the home in 120 days in exchange for 15% of the net profit from the sale. The penalty clause entitles him to the same profit, plus interest, should his friend decide to hold on to the home.
Investors who are new to house flipping may gain valuable insights from this show in addition to entertainment value. For example, Torres redirects his friend to choose aesthetic elements that will appeal to buyers instead of himself. He points out that time is money and stresses the importance of having a plan and sticking to a budget.
Beachfront Bargain Hunt
With hundreds of episodes over the course of 30 seasons, Beachfront Bargain Hunt is one of the most popular shows on HGTV. It follows homebuyers seeking budget-friendly homes in beach markets across the country. Waterfront homes tend to earn more revenue, so finding a budget home on the water can be a good investment. The show stays true to homeowners’ budgets and provides estimated rental income for buyers hoping to offset their mortgage payments.
But there are challenges and risks to owning a beachfront home, which the show fails to caution against. For example, beachfront homes tend to have higher insurance costs and may even be difficult to insure. Higher maintenance and repair costs can also impact homeowners’ budgets. Though it’s not the most realistic, it can be fun to watch homebuyers compare potential beachfront properties in different markets.
The Bottom Line
Most real estate reality TV shows have nothing to do with reality. But a few may be instructive, or at least interesting, to people with careers in real estate. Overall, we found Buy My House and The Deed to be among the most engaging and provide the most practical applications for real estate investors.
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By David Pickron
If you’ve ever purchased a gift for someone, you’re familiar with those three dreaded words you must be on the lookout for: “batteries not included.”
Most of us have experienced that moment on a holiday morning or birthday when the excitement of receiving something new is dashed as the recipient realizes that without power, they just have an empty box and a lifeless gift.
Knowing what is and is not included in any transaction is critical to achieving the end goal of both parties; this is especially true for housing providers.
I recently had a potential tenant who was going through some life challenges ask me if there was any way that I could include a washer and dryer as part of the rental.
Questions like these set off all sorts of alarms in my head. I’ve been at this for more than 20 years and situations like this have rarely ended well for me… but I reluctantly gave in and provided the washer and dryer at move-in.
Here’s why I entered into this agreement reluctantly: If they own the equipment and it breaks, they never call, but if I own the equipment and it breaks, I am the first call and end up playing repairman. Ideally, I avoid these situations, but under certain circumstances I do go that way and when I do, I always do these two key things that will also help to protect your investment.
No. 1 – Establish Your Ground Rules
When it comes to rental property, the number of items a tenant may ask for is unlimited.
In your business, determine in advance what and what will not even be a possibility to include with the property. When it comes to appliances, those that are attached to the property are usually included. I’m talking about items like a dishwasher or oven.
You might include a refrigerator if it is the built-in variety. Usually not included is anything related to laundry, microwaves, BBQ grills, etc. And speaking of grills, if you decide to provide one, make sure you establish that you are not responsible for providing fuel.
I’ve taken the brunt of an angry phone call from a tenant whose dinner party plans were destroyed when the propane ran out halfway through cooking their meal. Same goes for things like yard equipment if you decide to leave a lawn mower for the tenant who wants to maintain the yard. Each of these items present different challenges that require different rules, and it is best to lay out those rules in your lease.
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No. 2 – Put it in the lease
The lease is your first (and best) line of defense when it comes to items you have included in your property. I would recommend always using language that references the following categories:
- Ownership: Clearly state who owns the equipment that is included in the lease. This ensures that if something “walks” off at the end of the lease period, all parties know whom it legally belongs to.
- Responsibility: If something breaks, it is critical to know who bears the financial and physical responsibility for its repair. For example, if I were to include laundry units in the property, I include language like, “If the laundry units become non-functional, you are responsible for all repair costs. If you do not want to cover those costs, the units will be removed from the property and you will be responsible for procuring your own units. If, when the lease is terminated, the units are in place and non-functioning, all repair costs will be covered by your security deposit.” Clear and concise, the tenant knows exactly what to expect and you can look back on this if these situations arise.
- Terms of Use: The final piece of protection is having them understand the terms by which you are providing any item in the property. This might include a term similar to this, “As the housing provider I am not responsible for any damages to your personal items created by using the laundry units provided.” Or this fun one, “Use of the provided BBQ grill is at your own risk and expense. Housing provider is not responsible for providing fuel for grill and/or for any damage or loss of food associated with use of the grill.” It sounds like overkill, but I’ve seen and heard it all.
Being in this industry is a gift.
I can’t think of another place that would allow me to the opportunity for challenge and growth as much as being a housing provider.
Knowing if and what to include in a lease is paramount to finding success; but without fail, the satisfaction that comes from helping others is definitely “included” in every transaction.
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The promise of financial returns, stability, and the thrill of ownership often fuels real estate investment decisions. While various real estate options exist, few capture the essence of smart investing as aptly as multi-family properties. Multi-family properties offer a unique blend of convenience, profitability, and scalability. Let’s delve deeper into why you should make it a priority to invest in multifamily real estate.
The Allure of Multifamily Properties
Understanding the multifaceted benefits of these investments can pave the way for a secure financial future.
1. Strong Reasons for Investing in Multifamily Properties
Steady Cash Flow: One of the most attractive pros of multifamily real estate investing is the consistent rental income from multiple units. This predictability can significantly ease financial planning and provide a sense of security for investors.
Easier Property Management: Managing one building with several units is convenient and cost-effective. It’s often easier and more efficient than handling multiple single-family homes spread across different locations. Additionally, centralizing operations can lead to better oversight and management.
Economic Efficiency: Multifamily properties spread out the risk, ensuring you’re not reliant on a single income source. If a few units are vacant, the rental income from occupied units can offset potential losses. This buffer can prove invaluable, especially in fluctuating market conditions.
2. Understanding the Value: How Are Multifamily Properties Valued?
Multifamily properties are typically valued based on their income-producing potential. Factors like rental income, location, condition, and local real estate market conditions play a vital role. Furthermore, recognizing the property’s specific amenities and unique selling points can adjust its valuation. This deeper understanding is pivotal not just for purchase decisions but also when gauging how often real estate doubles in value. Remember, it’s not just about current value but potential future worth and the property’s growth trajectory.
3. The Buying Power: How Many Properties Can You Buy at Once?
While there’s technically no limit, the intelligent approach emphasizes quality over quantity. Don’t merely chase numbers; search for properties that offer immediate returns and long-term growth potential regarding appreciation and rental income. Moreover, consider the ease of management, potential demand in the area, and the sustainability of these investments. The key lies in balancing ambition with practicality.
4. Long-Term Benefits of Multifamily Investments
Investing in multifamily properties transcends the allure of immediate profit. It’s a journey of building lasting wealth and creating a legacy. When approached with foresight, it can provide benefits that ripple through time.
Appreciation Over Time: Real estate, especially multifamily properties, often see steady appreciation over the years. Beyond the tangible metrics, this appreciation signifies a neighborhood’s growth, enhanced amenities, and socio-economic development. As these factors converge, they promise increased rental income and raise the overall property value should you opt to sell in the future.
Tax Advantages: The realm of multifamily real estate offers a plethora of tax incentives. Depreciation stands out, allowing you to offset a portion of your rental income. Add to that the mortgage interest deductions and other tax breaks, and you’ve got a recipe for significantly reducing your taxable income, thus amplifying your overall returns on investment.
Equity Buildup: As you pay the property mortgage, you simultaneously build equity. This can be leveraged for future investments or cushion in financial downturns.
Scalability: Starting with one multifamily property can set the stage for further real estate acquisitions, enabling a more rapid portfolio expansion than single-family units.
5. Mitigating Risks in Multifamily Real Estate
Every investment comes with risks, and multifamily properties are no exception. However, there are effective strategies to mitigate these.
Diversification: By its very nature, a multifamily property is diversified. If one or two units become vacant, others remain occupied, ensuring a steady income stream.
Research & Education: Continuously educate yourself about the latest market trends and dynamics. Knowledge is a potent tool against potential pitfalls.
Professional Networking: Building relationships with real estate professionals, from agents to property managers, can provide invaluable insights and early warnings about market shifts.
Insurance: Ensure your property is adequately insured. This can protect your investment against unforeseen damages and liabilities.
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The Process Demystified: How to Buy a Multifamily Property
Investing in multifamily properties is undeniably a strategic move. Understanding the process of buying a multifamily property is essential to navigate this landscape. Every step requires attention to detail and a commitment to due diligence.
Market Research: Begin by identifying where to buy multi-unit properties. Prioritize emerging markets characterized by job growth, infrastructural development, population growth, and potential for rent increases. Economic and social indicators can significantly influence an area’s real estate prospects.
Financial Assessment: Determine your budget by evaluating your financial health. Factor in potential mortgage rates, property taxes, insurance, and the necessary down payment. An exhaustive financial review can safeguard against unforeseen expenses.
Property Search: Use platforms focusing on multifamily investments or collaborate with a seasoned real estate agent familiar with multifamily properties. An expert’s insight can sometimes unearth opportunities you might overlook.
Due Diligence: Once you’ve pinpointed a property, dive into a thorough inspection. Understand its occupancy rates, maintenance history, and potential repair costs, and scrutinize its financial statements. Being meticulous at this stage can prevent potential pitfalls.
Secure Financing: Approach traditional banks, credit unions, or private lenders. With the dynamic landscape of real estate financing, options are aplenty. A well-prepared business plan and a clear strategy can significantly improve your loan approval chances.
Closing the Deal: Ensure all legalities, like title checks and property liens, are in order before finalizing. Close the deal when you’re convinced of the property’s merit and all checks are satisfactory. Remember, it’s a marathon, not a sprint.
Widening Your Perspective: Beyond Single Units
The charm of investing in real estate doesn’t lie just in the bricks and mortar but in the strategy you employ. By focusing on multifamily properties, you adopt a strategy for consistent income, scalable growth, and mitigated risks.
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