HGTV Exposed by a General Contractor

TLDR
TV flippers make the work look more dramatic than it is, skip the due diligence they clearly did do, and over-renovate houses into profit-killers. The big lessons still apply. More work means less risk when you underwrite it right. The roof, structural, and foundation are never surprises to someone who actually looked.

Table of Contents

The Setup: Foundation Problems

They walked into this thing already listed, and the owner had told them upfront there were foundation issues. You could see the cracks running up the stairs. The kitchen tile as countertop was fine, backsplash was cool, cabinets were not bad. The ceilings were low, but there was material worth keeping.

Then the contractor gets on site. The house has sunk nearly 5 inches. On foundation work, even an inch and a half of movement is considered severe. 5 inches is a different animal.

Most likely the pool was leaking, saturating the ground. Saturated ground fails under the load. That is the most plausible story when a house sinks that much in one direction.

Common Mistake
Walking a house with known structural damage and not calling a structural engineer out the same day or the next. If you cannot get an engineer out tomorrow, there is no way you are buying this house. That is not being careful. That is being a professional.

The contractor on the show gave a 75,000 dollar bid on the spot. My experience is that is not how real structural contractors operate. That is a salesperson, not a contractor. A real structural bid has an engineer’s letter and a scope before it has a number.

The Save: Negotiating Off Known Costs

Here is the thing about big structural work. The more work you have to do, the less competition you have to buy the house.

The contractor says, “This is 10 times riskier than any normal flip.” That is not quite right. Risk comes from unknowns. If you have already written a bid that you know is real, and you know the ARV, there is no risk. You have an underwritten deal with a big renovation number on it.

  • 115,000 in general rehab
  • 75,000 in structural work
  • Plus acquisition, financing, carrying costs, and agent fees on the back end

Call it 190,000 in renovation plus whatever they bought it at. All in, probably in the 400 to 500 range. The more money you have to put in, the bigger the return has to be. So you negotiate off both numbers.

They were listed at 750. They went back to the seller and said, we need to take 75,000 off for the structural, and we need to come in at 650 to make this work. Nobody else is jumping to buy a house with 5 inches of sink. The pool of buyers got tiny the minute those cracks got real.

They settled at 550,000. 100,000 off the list price. That is the front-end discipline paying for the entire back-end risk.

Pro Tip
The bigger the renovation, the smaller the pool of buyers competing for the house. That is why underwritten risk looks like opportunity on paper. Do the math on known costs, then drop the offer to make the math work.

The Roof They Somehow Missed

Partway through demo, Jeff walks in and water is running down the wall. They fly a drone up. There is literally no roof. It is just sheeting, and even the sheeting is missing in spots. The front has a tile or two.

This is where I start to question the Hollywood in the show. You seriously think an experienced flipper, on a TV show, forgot to look at the roof before they bought the property? The ceiling stains were right there in the walk-through video they showed us. If there is staining, there is a leak, and if there is a leak, there is damage in the wall. Anyone who bought this house without a pro look at the roof is not running a business.

The actual roof replacement came in at 18,000. That is because a high-end tile or shake roof is expensive, but it is also not some cartoonish number. 30 to 40 grand on a tile roof is normal.

If there is a ceiling stain in the walk-through, the roof is on the list before you close.

The Pool Hill

After the foundation, the pool itself had pulled downhill. An engineer says the fix is peers under the pool, retaining walls to hold the hill, plus soil work. 80 to 100 grand more.

They are looking at 100 grand on top of everything else. Instead, they decide to tear the pool out, fill it with dirt, and move on. Price to demo the pool: 10 to 15 grand.

Here is the thing. If you fill the pool in and do not fix the hill, the hill is still moving. You still have a structural issue at some point. But for a flip timeline, demoing the pool, filling it, and selling the house with a clean yard is the right call.

Was the hill problem a surprise? No. If you are buying a house on a hill, that is the first thing you check. Hills do not hold themselves up. Eventually they wash away. You walk a hillside property looking for signs of that specific failure.

I don’t believe they didn’t see the structural stuff on the back. If you had anybody come give a structural estimate on the spot, those are trained salespeople, not contractors. Either he saw the bigger problem and waited to spring it, or the whole sequence was staged for TV. Either way, it is not how a real flipper walks a house.

The Bottom Line: Riding the Wave

All in: 550 for the house, 250 in renovation, 30 in closing and commission, 5 in staging. 835 total. They sold in escrow at 1,075. Call that a 200,000 dollar profit before you count time and stress.

But here is what gets lost in the Hollywood ending. The project took 7 months. During those 7 months, the market went up. The house was worth more at the end than they thought it would be on underwriting day.

I call this the wave. Market appreciation carrying you up while your project is running. Early in my career I was convinced I was making all kinds of money. In hindsight, I did not make money because of flipping skills. I made money because the project took so long that the market carried me. I rode the wave.

Key Concept
The wave is great. It is wind at your back. But you need to make sure you would have made money in a flat market. Plan to profit in stagnant conditions. Do not fool yourself that your skills did it.

What TV Flippers Actually Get Right

Three things worth taking from the show, even with the Hollywood on top.

  1. More work means less risk, if you underwrite it right. A foundation house scares off the retail competition. You get a great deal on the front end, and once the deal is done, the only unknowns are the ones you did not scope. Scope hard, bid hard, and the risk goes away.
  2. The HGTV look sells. Greys, whites, blacks, LVP floors, white walls, Shaker cabinets. Everyone has seen it and everyone pays for it. It is a simple, repeatable finish package that removes guesswork. You are not paid for creative vision. You are paid for predictable resale.
  3. Do not make it an oddbird. They took a Santa Fe style house in a Santa Fe style neighborhood and put stucco and asphalt shingles on it. The style no longer matched the street. An oddbird misfits to the market, and misfits have smaller buyer pools. Supply and demand always wins. Fit the neighborhood.

And the big six you walk on every property, every time: roof, mechanical, electrical, plumbing, siding and windows, structural. If you do not know the state of all six before you close, you are not underwriting, you are gambling.

The Biggest Take-Away: Don’t Over-Renovate

When the numbers show they could have cleaned the house up, fixed the structural, and sold it to another flipper for a smaller profit but a much shorter timeline, that is often the smarter play. A lot of TV flips end with them replacing things that could have been reused. At the end of the project the only thing still standing from the original house is some of the framing. At that point you should have torn it down and built new.

The key to flipping is a good eye for what to reuse. Recycled materials at the same visual result. Save the creative vision for your hobbies and run the business.

FAQ

How do I know if a house has too much structural work to be a good deal?

There is no “too much” if the math works. You need a structural engineer’s letter before you close. If a contractor is giving you a structural bid on the spot without an engineer, that is a salesperson. Walk away and find a real structural contractor.

Should I trust the contractor’s bid, or always get an engineer first?

Always get the engineer first on structural. The engineer tells you what to do. The contractor tells you what it costs to do it. Two different jobs. One person doing both is how you end up with a 120,000 dollar bid against a 30,000 dollar real cost.

Is the HGTV look really the right finish for every flip?

For median-price flips in most neighborhoods, yes. It is the look most buyers recognize and pay for, and it uses inexpensive materials. You can get fancier on an A-class house, but even there, timeless and clean beats trendy. The goal is a wide buyer pool.

What’s the big six and why do I walk every property for it?

Roof, mechanical (HVAC), electrical, plumbing, siding and windows, and structural. These are the failures that can eat an entire project budget. You assess all six in your walk-through so nothing becomes a surprise change order after you close.

Just starting out. Should I avoid houses with foundation problems entirely?

For your first one, yes. Foundation and structural require a trained eye to scope and experienced contractors to execute. Start with a cosmetic flip in a good neighborhood. Work up to structural after you have done two or three clean ones.