A “wild and crazy” deal for Steve Martin

Steve Martin might be a “wild and crazy” guy but seems the comic has a fair amount of savvy when it comes to investing in real estate. MSN recently reports that the funny guy has listed his villa in St. Barts for $11.4 million. According to CNBC Martin paid about $9 million for the house. If he successfully flips that will put his ROI at about $2.4 million. Not too shabby for flipping houses on the side.

According to MSN Martin bought the property back in 2008. St Barts suffered with the rest of the real estate world in 2008 and 2009 having its share of foreclosed properties. His timing is perfect with luxury buyers pouring into the Caribbean area as the real estate market recovers. It seems house flipping has become the day trade of our time.

But in the rush to make a profit and jump on the flipping wagon, many would be real estate investors overlook the basics and end up floundering. Reality is you have to educate yourself on market trends and put systems in place. Make sure you can work the numbers and the “deal” is actually worth the risk.

Even if you get that deal of a lifetime, you need to know which renovations to actually do.  Keep in mind that you should also understand the applicable tax laws and know what repairs are not necessary. A lot of first time flippers fall into over improving.

It’s not as easy as it looks on TV.  There are new real estate investors  out there, which means that the obvious deals are gone in a heartbeat. It is important to set up a good team from the start. Make sure your realtor is on the up and up on deals. Finding those houses takes time and once you find them, you’ll need to move fast.

But why all the TV shows about house flipping?

As The Wall Street Journal reports:

“When the financial crisis hit Wall Street in 2008 and the housing market began to unravel, many of these networks chose to retool those shows or take them off the air to keep current. New episodes of A&E’s “Flip This House” haven’t aired since 2009, and networks such as Scripps Networks’ HGTV introduced programs such as “The Unsellables” about making over homes to help owners who can’t sell their properties. The shows that weathered the storm and stayed on the air had to change their focus.”

Most of the time those  “reality” shows are leaving out key pieces to the puzzle like realtor and mortgage fees. We predict those shows will still show you a lot of fantasy and find it much more entertaining than the reality of standing in line for hours at the building-permit office.

So before you make your own “wild and crazy” deal, again educate yourself. Find out if you are in a good market or research a market you would like to break into.  Make sure you have your financing in order and make sure you have the right set of skills or can hire the people with the right set of skills to make flipping houses profitable for you and your family.

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