FLIP BUT DON'T FLOP
Wednesday Sep 18th, 2019
Flip" But Don't "Flop"
With a volatile stock market and some real estate prices on the way down, you might be tempted to try “flipping” properties. If so, here are a few ideas.
What to Look For
- Desirable neighbourhoods close to amenities such as schools and shopping. Country properties are usually too risky to “flip”.
- Smallest or ugliest house on the block, if it can be made to conform to the area.
- In good structural shape, with just cosmetic renovations required.
- Well designed floor plan and popular style
- Hardwood floors hiding under carpet
- Spacious kitchen & master bedroom.
- More than one bathroom or potential for a 2nd bathroom
What to Avoid (alias “The Money Pit”)
- Water problems in the basement
- Signs of mould in the attic, in the basement, in closets or on walls
- Knob & tube wiring or 60 amp service (unless you’re an electrician)
- Rotting windows
- Sagging floors & roofs
- Houses where dogs or cats socialized, leaving their scent for all to enjoy
- Properties in areas where houses are not well maintained
- A house needing major renovations requiring a lot of time.
Before You Buy….
- Know what repairs will cost and how long they will take
- Research the area to find out what type of finishing is required. Don’t spend money on granite countertops in a “starter” home, but do put quality hardwood flooring and custom kitchens into a house in an upscale neighbourhood
- Be sure the location of the “flip” is right for you. If you can’t pay a daily visit to the house to see how well the contractors are working better skip that purchase.
- Know market value in the area & be sure to plan for a profit. If you spend too much time or money on the renovation you can actually lose money
If Things Go Wrong
If the “flip” isn’t working out as well as expected, get some advice and be ready to bail out as fast as possible. Don’t market the property at an unreasonable price for too long. It only gets worse. Sometimes your first experience just teaches you some good lessons for the next time. Be ready to learn, and be flexible. In a slow market you might end up renting out the house instead of selling, or you might have to offer some attractive financing to get out from under.
A great resource is “Flipping Houses for Canadians for Dummies”. Read it before you buy.
Don’t forget to let your realtor know what you’re doing. She can be an invaluable resource throughout the “flip” with advice about market value, what type of renos are best, and will keep you posted on market conditions.