The Renovation Delusion

Many people think that they can strike it rich from buying houses that need major renovation work, transforming those fixer uppers into beautiful homes and then reselling them for a huge profit. They see it on TV, on YouTube and hear stories from friends and family about the fortunes made from rehabbing junkers. But is that business model actually highly profitable? What you're about to discover is that they have the Renovation Delusion! You'll learn what the delusion is and how to correct that flawed thinking. EVERY real estate investor needs to watch this video!

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Comments

  1. Armandine Jacotin says

    As usual, great information Phil. I always thought that is something good to try to do. Now I know better. Are you saying that even if he ended up spending 15 to 20 thousand more, and got 120 in the sale, it still wouldn’t be worth it? Or might it be that he could not get that 120 for it because the median price in that neighborhood is only 100 thousand or so?

    • Phil Pustejovsky says

      I’m saying you will make more money but nor embarking on a major renovation at all! But instead, sell those properties as-is and let the market pay too much for it.

  2. Dear Phil:

    I own a 3 bed, 3 bath condo on the 15th floor of a high rise building on the ocean with great views of the ocean from the front and beautiful views of sunset looking out the back at the intercoastal and 2 cities in Broward County, while having dinner. It is a luxury condo with many amenities, that is for sale. The real estate fees are $42,000 and I owe $450,000, plus another $25,000 in legal fees, county stamps and closing costs. A person wants to give me half the asking in cash and wants to rent the condo as partners for about 3 or 4 years and then sell the condo for a profit as the value should increase. That person wants to leave the marble tile floors, but buy a new dining room table and chandelaire lighting and buy a few new appliances for the kitchen to help obtain a good rental! The person asked where could one put the funds to get more income with tax write-offs. Does that sound reasonable?

    • Phil Pustejovsky says

      You don’t hear those terms everyday! Sounds like a lease option whereby you get a gigantic option payment upfront. So long as that payment is nonrefundable, and the final option price is reasonable to you, that may make sense. Also, you’ll need to be able to evict him if he doesn’t pay the rent.

  3. Phil, you’re the greatest! Thanks!

  4. Zack Clarke says

    Great video Phil. Can you make one on creative financing for commercial property? I have some cash but not enough for 30% on most commercial deals and have reserves.

  5. I bought a house for $35000.00 rehab around $20,000 mostly materials because my husband does the work and we sold it for $172,000 and the new one we bought for $51,000.00, $20,000.00 for rehab and listing it for $140,000.00 so it’s worked for me

    • Phil Pustejovsky says

      How many hours was your husband working? That has to be factored in. Materials alone is not rehab costs. Furthermore, you probably could have sold it as-is for $110,000 and $90,000, respectively. Had you just sold it as-is, you would have probably made just as much, or more (if you factor in the labor costs).

  6. Mehiar Mehran says

    I am impressed by your honesty.
    I have a general contractors license in Denver Colorado. Want to get into flipping houses but am too scared to do anything in this market. Need mentoring.

  7. Gernot Ritzau says

    I don’t agree with you 100%, the problem we have is, that complete novice rehabbers are coming in and pay top dollar for junkers. They take a perfect business model. For someone like me that likes getting down and dirty, I Don’t mind the torchure of rehabs!
    I am not a paper pusher that likes nit picking around with motivated sellers about what their beauty is worth…I like to buy the john and make it castle again…

    • Phil Pustejovsky says

      You are proving my point that there a Sucker Investor Buyer is born every day. If you want to get paid to get down and dirty, then get your contractor’s license and become contractor.

  8. just sell it as is!

  9. love yr show

  10. You are the man Phil! Always keeping it real! Thank You

  11. Willy Jarboe says

    Was impressed with the video because it was a lesson on wasting money on renovations which might actually be nothing other than a vision and a money pit. We have to choose carefully what renovations are worth investing in and the renovations that won’t be profitable to the discoveries. Opportunities are available we may induldge to keep rather than hand off to the highest bidder or abandoning. Very informative and maybe a rude awakening for the dreamers and visionaries full of probable imagination.

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