7 Things Not to Do When Flipping Houses

Nationwide trend of buying below market value, fixing up and reselling at a higher price is once again lucrative.
3:00 | 03/31/14

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Transcript for 7 Things Not to Do When Flipping Houses
The last few months -- and -- and between house together that would conflict have to take one great. -- modern family trying to flip houses for profit is. Not for the -- of wallet. It's from -- or Italy well it's where Michelangelo's -- the marble to me David. Now we know added even couldn't afford clothes and it turns out light does imitate -- this that they. It is the only bathroom. It's Monday morning and -- in Charlotte, North Carolina following a pair of real house -- doing anything electrical plumbing. I don't think it's an update. Two women who have been in real estate for a decade looking for their next big school but this property looks like -- home buyers nightmare. 11100 square feet of hidden horrors. That's up from the exterior windows would probably happier place there's definitely a good bit of what -- would rot warped floors -- dated back after. And a special surprise in the master closet. I don't think this is just kind of pain six. An injury with the housing market improving since the crash of 2008 home. Others like him Williams and Maria how -- are taking advantage of the turnaround -- -- -- how we gonna be beaten. -- so what do you think this life. A lot of work but there are some red flags in this world -- -- -- -- property. -- to North Carolina up 35%. In the last. Clippers averaging 37000. Dollars gross profit -- property. Even areas say this 175000. Dollar property with the -- renovations and additions. Could sell for as much as 500. Dollars. -- But there are no guarantees. You're looking at 35 many before it. TV shows about flipping are everywhere from -- -- to rehab at -- they make it seem like it's an investor's playground. If you know what you're doing. Across town Lisa a stay at home mom and her friend Carmela and -- -- sister Alina our first time flippers. It could be tried to get into the game. A lot of he would -- should never get into business with friends or family can -- -- health. And they're hoping there's still money to be made. We definitely miss the heyday. Really cheap housing but then we were -- that would have trouble selling after losing out on six other properties in bidding wars. They've got this modest three bedroom for 150000. Dollars -- what -- it like when you pulled off. And got a kitchen floor was sinking and you you Brockton in -- kind of creek bed and the yard was a -- all this survey are still can't figure out exactly where the property line has. Between renovations and real estate fees they put 60000. Dollars into this project figuring things out as they went. Looks like a standard that. -- -- -- -- What husband that they can't say when you told them Wear flip he apartment and then when we -- take out the mortgage news a little bit more nervous. When we had put in money had been an hour and because it's never sure thing that's where the first rule of real estate comes -- location location location. Some of these problems -- -- and you really rather be safe than sorry. Not every market is as we friendly Charlotte -- -- -- order. Rewards are vulnerable were really have a mark -- is -- tough talking gun carrying police sealed real estate broker. Who split fifty properties across the country -- latest acquisition in Dallas is in 1930s bungalow. It's become quite a challenge. Sure. -- -- -- -- -- -- -- He knows it takes skin and that tough reality to be successful in the clinching game. This -- -- a first project a second project about a fifth project. You've been doing this for five years maybe. Some experts. He helps first time flick percent of the market around the country putting the misconceptions is that it's very simple -- and a no money down government to make a 100000 dollars and two. I think people over simplify it and they don't take enough time educating themselves. Back in Charlotte. Murray and realize making a profit would be tough to make this work as a living you gotta be. -- about four six at least 46. To -- for an eight year marriage incidents. Party and comes. -- twelve slips under their -- even read our scouting is up and coming neighborhood for homes to add to their portfolio. He got the already have 100 going up on this block the people that owned it and lived in it for forty years were actually here to watch it go down. Three -- three McDonnell. Will be no more. This used to be -- 12100 square foot home. But for 240000. Dollars didn't -- fourth down and are completely rebuilding -- 3800. Square foot house. That they recently put on the market for 950000. Dollars. I think the toughest thing right now is finding the deals two years ago able to find. This type of property over and over and over can't see -- reporters here. -- eighteen for an average return of 25 to 30% on each rehab property it's not easy most people lose money on flat I know a lot of people feel that they can do along the -- themselves and then when it becomes complicated. And they have to hire the people and they have -- and that can't stand clear of the lighting -- we need the butcher block and they bargain hunt. Her every day because every dollar saved is another dollar in their pocket. -- -- -- -- -- blue warns that it went rehabbing the keys to fix it up not calamity out. -- every house needs to -- rehab. To a level that my wife might want to -- it needs to be rehab for the level of the neighborhood so that will sell like any other home in the -- Carmel -- and -- -- as first time -- was finally finished after tearing down a -- removing the chimney and -- the kitchen. And surviving a sneaking counter. They're like -- ice to different points this past November they list of the. -- for 275000. Dollar what. You really think at this one arm. I think personally for me we want something that we can grow into I think Chris wealth. But even after a successful open house they still don't have any offers. And that leads the women to seriously assessed their finances and how long making keep the house on the market. Yes he wrote Qaeda of those marriages every time -- -- don't think mortgage pain. January came in went. House and console and he -- today we hadn't maintain everybody else has selling within thirty days and didn't quite happen that fast. Now four months later it's under contract for 233000. Dollars not quite the 275000. Dollars -- they were -- They'll be splitting the 25000. Dollar profit three way it's. We didn't want to lose money on the deal we definitely wanted to see if we can work together without killing each other and we wanted to learn a lot along the way the fact that we. We didn't make money is sort of icing on the cake I mean think that we are likely to do it again. For Nightline I'm Rebecca Jarvis in Charlotte, North Carolina.

This transcript has been automatically generated and may not be 100% accurate.

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