When the term apartment flipping comes to mind, you generally start thinking about stories of people who bought their apartments for mere fractions of what they end of re-selling them at, only for the sellers to end up filthy rich and to do it all over again. It does sound like a great story and lifestyle, and maybe even something you want to pursue. While there are many apartment flippers out there in the wild, their strategies are not simply as rinse and repeat as you might expect. The goal of flipping is to make money, but flipping isn't always as easy as it seems. This is where we need to distill what reality might look like from the mighty dreams. Let's dig into 5 myths and expose the truth.

Myth #1: You can flip anything that needs a renovation.

There are plenty of apartments on the market that need renovations. However, there's a difference between transforming the unit into your dream home and turning it for a profit. Many buyers will consider properties that need work with the understanding that doing renovations will result in an appreciation of the unit. However, despite the appreciation that comes with doing such work, whether it be cosmetic or a full gut reno, it does not guarantee profit if it were to be sold right away. Why is that? Because between the cost of the renovations and the transaction costs involved both on the sale and on the purchase of the property, it will be very hard to turn a profit. That means that if your goal is to simply buy, flip and sell, the majority of inventory that you will see on the market is not going to pass your criteria of making money. On the flip side (pun intended), if your goal is to turn the apartment into a home you love, and you do the work, you will have something that will naturally be more valuable in the future because you've put the sweat equity into it. Just don't expect to break even on sweat equity within a year of buying. 

Myth #2: Flips require renovations.

Not all flips require putting in the work into renovations. They key to a good flip is buying low and selling high. Just because something is already nicely renovated doesn't mean you can't flip it. How can that be? Well, it all depends on market timing. For instance, you may have bought something in 2009 only to re-sell at a significant premium in 2012. Does not putting in the work make less of a flip? If your only measure is money that you're making, then you shouldn't care how you flip. However, as a warning, timing the market is going to be nearly impossible and requires you to have a strong stomach and willingness to take a risk. Given the current state of the buyer's market, right now might be to buy into a dip. However, are there guarantees that prices will recover as quickly as you hope? Nope!

Myth #3: You can't flip new development.

Most buyers assume that new development is already so highly priced that there is absolutely no way that you can flip it. While that may hold some weight when you're deep into the sales cycle of a new property development, when buildings initially release inventory, there are always opportunities to scoop up immediate deals. Imagine being able to get a several hundred dollar per square foot discount just because you're on of the first contracts signed! You'll still have to wait a year or two for closings, but once you close, you're already going to have a baked in profit. Will it be enough of a profit to justify an immediate sale? Well, we wouldn't encourage you to buy if that's your expectation, but already having the upside, should you choose to sell it immediately after closing or years down the line, is going to put you in a great financial spot.

Myth #4: You can't enjoy your flip.

There's plenty of apartment owners who have bought their apartment decades ago. Think of those SoHo lofts, Tribeca penthouses or West Village studios. The people who bought those properties may have been risk-takers and visionaries at the time for what their respective neighborhoods would become. Now they've decided to move on in their lives. Guess what, that apartment that they're selling is probably hundreds of thousands to millions more than what they bought it at. Now that's a flip! Remember, these folks enjoyed their lives in these spaces. They lived life there. This wasn't about some quick get rich scheme. But yea, they're going to be pretty well off now. You can also flip if you take the long-term view. Don't just assume flipping is something you have to do in one breath. Maybe it's something you do over a decade of living in a space you really love.

Myth #5: To properly flip, you have to find off-market listings, foreclosures or short-sales.

Many would-be and wannabe flippers instinctively assume that riches can be made by pursuing opportunities that don't have active market visibility or liquidity. While opaque listings can make for good flip opportunities, they also carry a lot of risk. They may not be mortgageable by traditional means, require hard-money loans and could turn into total money pits. Of course, for a seasoned flipper, this is probably where the majority of the feasts take place. But if you have no experience, this is where you might end up with all your cash tied up in something you can't easily dig out of. Many real estate brokers in NYC are also not going to be working with you on these types of listings, so buyer beware. Look for someone you can trust who won't sell you on a fake dream.

Overall

So now that we've explored some really big flippin' myths, who is ready to start looking for a good flip? Hopefully you come out of this read with a newfound understanding of what it means to flip an apartment in NYC while keeping your money and your sanity in check.