Welcome to the inaugural installment of Roger's Rules, where I share lessons learned not in classrooms or from books, but at the Church of the Painful Truth - an institution where tuition is paid in cash, the curriculum is brutal, and I've somehow earned the title of Associate Pastor.

Today's sermon concerns house flipping, that seductive siren call that's destroyed more investor bank accounts than the stock market crash of 1929. These aren't comprehensive guidelines - just a few of the many rules I wish someone had tattooed on my forehead before I learned them the expensive way.

Here's the thing about small towns: they're charming, the properties are cheap, and the competition is thin. Know why? Because there are no buyers.

Never flip a house in a town where the only people moving there are folks moving back home to be close to momma. Population decline is the silent killer of flip projects. You can create the most gorgeous renovation the town has ever seen, but if there's no one to buy it except the three people who already live there, you're just creating an expensive albatross.

I learned this one by buying a large house in Warm Springs, Georgia. We made a lot of new friends with neighbors and shopkeepers stopping by, thanking us for fixing up the old eyesore. The renovation was stunning. The market was nonexistent. I held that property for over a year, bleeding carrying costs monthly, before finally selling it for exactly what I had into it. Zero profit, maximum pain. See the details in my book “Flipping Houses in Ten Days” available on Amazon.

Small towns work when the overall market is hot enough that people are fleeing cities for cheaper living. Otherwise? Pass.

There's something romantic about restoring a historic property. The crown molding, the original hardwoods, the architectural details they don't make anymore. You know what else they don't make anymore? Money on historic flips.

Historic designations come with regulations that would make a Soviet bureaucrat blush. Want to replace those rotted windows? Better match the exact style from 1887, use approved materials, get the historical committee's blessing, wait six weeks for approval, and pay three times what normal windows cost.

Every decision requires committee approval. Every delay costs money. Every "unexpected" requirement - and there will be many - adds weeks to your timeline and thousands to your budget.

I once bought a home in a historic district thinking I was smart enough to navigate it. It was a grand 100 yr-old house that somewhere in the previous 40 years someone had turned into a duplex by hacking another door into the side of the front porch. To add insult to injury, the “door” they used was a hollow core interior door that was mostly rotted. It took months just to get the approval to put the house back to the way it was originally. The renovation took eight months longer than planned because of approval delays alone. A neighbor complained because we replaced a 100-yr old single-paned broken window with one that looked the same but was insulated double pane. Another neighbor complained because we were using “new” wood for repairs instead of “historic” wood - whatever that is. Never again.

This is where ego kills profits. You start imagining yourself on HGTV, creating masterpieces that will transform neighborhoods and win design awards. Meanwhile, your budget hemorrhages and your house has a birthday (never good for a flip).

The bigger the budget, the longer the timeline, and exponentially greater the likelihood of unexpected problems. It's not a linear relationship - it's geometric. A $50k flip might encounter three problems. A $150k flip will encounter fifteen.

Remember: you're creating a product to sell, not a monument to your taste. The goal is maximum appeal at minimum cost. Shiplap and subway tile aren't exciting, but they're predictable. Exotic materials and custom everything aren't worth the premium buyers won't pay.

As Voltaire didn't quite say: "Perfect is the enemy of profitable."

This one's going to irritate some people, but it needs to be said: most wholesalers don't know what they're doing. And those who do? They know exactly how to make the numbers "fit" your buying criteria.

That ARV (After Repair Value) they quoted? It's probably inflated. The repair estimate? Probably low. The timeline? Laughably optimistic. They're incentivized to close the deal, not ensure your success.

I've seen wholesalers list properties with repair estimates of $30k that actually needed $80k. I've seen ARVs based on comparable sales that weren't remotely comparable. The worst part? Some do it knowingly. Most just repeat what they've been told without verifying anything.

Treat every wholesaler deal like it's radioactive until you've done your own analysis. Bring your own contractor. Pull your own comps. Verify everything. If the deal only works with the wholesaler's numbers, it doesn't work.

I know what you're thinking. "My situation will be different." "I'm smart enough to anticipate the problems." "Those rules don't apply to me."

Yeah, me too. Until I wasn't.

I've been in this business long enough to recognize the voice of optimism masquerading as wisdom. I had that voice once. It cost me a lot of money to quiet it down.

This is a free country, and you're absolutely free to ignore my advice. I'm rooting for you - genuinely. Maybe you'll be the exception. Maybe your small-town flip will find a buyer in thirty days. Maybe the historic committee will approve everything on first submission. Maybe that wholesaler's numbers are gospel truth.

And when it falls apart - notice I said when, not if - I can help you then as well.

Welcome to the Church of the Painful Truth. Services are ongoing, your contributions are welcome but non-refundable, and the lessons stick forever.

Amen, Church dismissed.

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