I know it is not good for me, but I love to watch television. I love watching football, especially the Broncos and I love watching reality shows. I don’t like drama filled reality shows where 8 strangers are put through situations they’d never meet in life. I like reality shows that involve businesses and succeeding in business. Since this article is about real estate investing, you may think I like to watch fix and flip shows or DIY house repair shows. I actually don’t like those shows, because the DIY shows aren’t about business and the fix and flip shows are not realistic. You can learn about real estate investing from watching many other shows.
The shows I like are Bar Rescue, Hotel Impossible, Dinner Impossible and Gold Rush. To a lesser extent I will watch Pickers, Storage Wars and Shipping Wars. The first four shows I mentioned are all about running a business, hiring people, investing in your business and making a profit. The other shows are more about working for your business and those people limit how much they can make by how much time they have in the day. I think we can learn about how to invest and run a business by watching these shows; learning what to do and what not to do.
Why I don’t like house flipping shows on television
I will watch house flipping shows on occasion, but for the most part I stay away from them. They can be entertaining, but also extremely misleading to the public. Most house flipping shows leave out many costs and misrepresent the profit people make. Most fix and flip shows forget to mention real estate commissions when selling a house, title insurance and carrying costs like utilities, insurance, interest and much more. On some of these shows the margins are so tight that these fix and flippers are guaranteed to lose money and the show makes it seem as if they made thousands in profits.
The other thing that really bugs me on the fix and flip shows is they try to put a value on every feature or repair done on a house. New granite counters; cost $5000, added value $10,000. In my mind you can’t value a house by piecing together all the repairs. You value a house by comparing it to other homes that have sold and possibly adding or deducting amounts for major differences in features or condition. Many repairs on homes will not add value, but will make a home sell quicker like nice fixtures. Buyers expect things like roofs and furnaces to be working and in good shape. Replacing those items does not add value.
What Hotel Impossible can teach about investing in real estate
Hotel Impossible is a show that involves host Anthony Melchiorri visiting hotels around the country that are struggling to survive. Anthony is very charismatic, fun to watch and brutally honest to the hotel owners and staff. Anthony’s job is to find out what is wrong with the hotels and fix them so the owner can make money. The show focuses on cleanliness, attractiveness, customer service, marketing and management of hotels. It is interesting to know that many times it is not the price of a room that is affecting sales, it is the impression the hotel gives off. A lower priced room can actually hurt a hotels reputation for many people looking for a place to stay. The most important thing for hotels is the first impression they give people and reviews. People depend on good reviews in the hotel business and bad reviews will kill revenue.
I have learned a lot from Hotel Impossible. All the problems in Hotel Impossible seem to come from one major cause: owners trying to save money by being cheap. They don’t hire enough people, don’t spend money on training, don’t remodel the hotel or don’t market the hotel. It is crazy how many hotels they feature that don’t have a way for guests to book online! That is the only way I book hotels and the only way I know about hotels is if I can find them online.
You can learn a lot from Hotel Impossible in relation to investing in real estate. You must spend money to make money and hire great people. If you are flipping homes make sure the major repairs are done and are done well as first impressions make a huge difference. If you are renting out homes make sure they are clean and you have the staff to handle all the busy work. If you have to sell a housen use professionals like a Realtor to get the most money and sell the home quick.
What Bar Rescue can teach about investing in real estate
Bar Rescue is one of my favorite shows on television. John Taffer is the host and is an expert on turning around bars. The show goes to struggling bars across the country, identifies why the bars are struggling and then fixes the bars much like Hotel Impossible. The bar business is much different from the hotel business, but both focus on sales, customer service, appearance and cleanliness. John runs into many owners who got into the bar business, because they liked to go to bars and figured owning a bar was a great way to spend even more time drinking. The problem is drinking and partying don’t mix well with running a successful business. His number one rule is no drinking on the job by anyone; employees, owners or managers. One of the reasons drinking on the job is bad is your employees are drinking your profits. You can make a lot of money in the bar business if you run a tight ship and track your overhead. You have to have accurate pours, portions for food and a tight budget.
Bar Rescue can teach real estate investors not to drink on the job! Hopefully no one is out buying houses while they are drinking, but you never know. When buying rental properties or fix and flips, you have to know what the costs will be. You have to know how much repairs will cost, closing costs, maintenance and any other cost associated with the deal. I don’t always get exact estimates for costs before I buy a house, but I have bought real estate for over ten years and know what things will cost. If you don’t know exactly what repairs will cost, they could easily eat all your profit away and turn what appears to be a good deal into a horrible deal.
What Gold Rush can teach us about real estate investing
I lied, Gold Rush may actually be my favorite show. The reason Gold Rush is so awesome is you get to see what goes into a gold mining operation. It is not about getting lucky and finding millions of dollars in gold on some land in the mountains. The people who make money in gold mining run professional operations with a ton of overhead and have a crazy work ethic. All the gold miners on the show are mining in Alaska in extremely rural conditions with extremely expensive equipment (except for Todd Hoffman who is mining in Guyana). To run these gold mining operations, you must have multiple bulldozers and excavators to get the dirt out of the ground. Then you have to get the gold out of the dirt which is another massive project. One bulldozer costs $140,000 and repairs on these machines are not cheap either; a new pair of tracks for a bulldozer is $50,000!
Much like real estate, gold mining is not a get rich quick scheme. There are people who make millions in the mining business, but they have made huge investments and have huge operations. The mining companies are not blindly digging in the ground hoping to find gold (the successful ones), they are testing, researching and doing their homework before they invest millions into these mining operations. I actually feel really good about myself and my real estate business after watching Gold Rush; I think I am in a much more stable and profitable business! Many of the miners featured on the show don’t make a profit after working 14 hours days for months in a row.
I highly suggest you watch Gold Rush, because you can learn so much about real estate from the show. The first thing to notice is that whether the gold miners make money or not, the land owner makes money. 90% of the miners are leasing land from land owners and those land owners get a percentage of the gold mined off their land whether the miners make money or not. The land owners don’t have to do any of the work! Gold Rush also teaches a lot about the importance of planning and knowing how much gold is in the ground before you dig. Real estate investors need to know how much their properties are worth and what they will rent for before they buy.
Todd Hoffman is one of the featured miners on Golf Rush and I think he shows how not to run a business. Last year they invested a lot of money and actually figured out how to mine in Alaska successfully. There success came after they had lost money or barely made a profit in their first years mining. This year instead of building off of that success and continuing to grow, Todd moved his entire operation to Guyana. Guyana is in South America and he shipped hundreds of thousands of dollars in equipment to South America in hopes of hitting the mother-load and making millions. The season is not over yet, but while the other miners are making money in Alaska, Todd Hoffman has not found any gold yet and many of his crew have given up. In Guyana he tried to bring huge trucks across bridges and roads meant for scooters. They have spent their entire season creating nice roads for Guyana instead of mining. Don’t continuously look for that pot of gold if you have a good thing going. It takes time to build up businesses, and there are very few if any get rich quick schemes that work. Make sure you know what you are getting into before you start a massive project. In the last episode, Todd finally found some signs of gold and even diamonds, we will have to see how this pans out. The reason he found the gold? He talked to a local expert who helped him look for places to mine. If you are just starting out in real estate, don’t be afraid to ask the experts for help.
What Real Estate investors can learn from Jungle Gold
Jungle Gold was another gold mining show that aired last year about two failed real estate investors from Vegas. The miners racked up millions in debt and moved to Africa to get rich mining gold. During their stay in Africa they must have switched strategies for mining 5 times and ignored the advice of every expert they talked to. They continuously looked for a way to make millions of dollars without doing much work. Even when they started finding gold and making money they quit, because they weren’t making enough money. In the end they left Africa having lost all of their investment and going deeper in debt. I have a feeling I know exactly how they lost their money in Vegas in Real Estate. They most likely bought houses assuming they would keep appreciating like crazy and did not do their research on values or have a back up plan if prices did not increase. When the market starting going down, they lost everything because they couldn’t rent the homes or sell them.
From Jungle Gold we can learn to always plan for the worst case scenario and not to be too greedy. Businesses take time to be implemented and grow and you can’t give up after running into a few bumpy spots in the road. You also need to invest for cash flow if you plan to hold properties and you need to buy properties below market value no matter how you invest in real estate.
Television may not be the healthiest thing for us to do with our time, but the right shows can teach us a lot about business. To be successful when investing in real estate or running any business you have to do certain things. You have to plan everything, keep detailed reports on costs and profits, be determined to succeed even when things look bad, know your market, know what is important to your market and hire the right people. One great thing that Hotel Impossible does is they try to make it possible for the owner of the hotel to detach themselves from the business. They focus on the staff and managers and sometimes flat-out tell the owner to go on vacation and let the managers do their jobs. I think this is something we should all strive for in business; creating something that can run itself while we collect checks every month.
Personally I feel books are a much better way to learn!
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