HGTV makes it look so easy – buy a fixer-upper, throw a little money at it and voila – you’ve just made $50,000. Of course the reality of flipping houses for profit isn’t quite as simple as ‘reality TV’ would like to make us believe. There’s a lot you need to know:
Know your numbers! When it comes to deciding which property to buy, you need to do a lot more than determine fair market value. How much will your renovations cost be? What will your closing and selling costs be? What are your carrying costs? What are the tax implications?
Don’t get emotionally attached – you’re an investor, not an end-user. Don’t pay $100K over asking unless the house was underpriced by that much in the first place.
Know what you will sell for! This is one of the most important factors in choosing what property to buy (and one of the reasons you want to work with an experienced REALTOR). Buyers don’t care what you paid for a house or how much money you put into it or how much profit you want to make. Find out what prices the street can carry and don’t over-renovate for the street. If you buy a house for $600K , put $100K of renovations into it, on a street where the most expensive ever sold is $700K, prepare to lose money.
Location, Location, Location! To really see a profit, you need to buy in a HOT neighbourhood that has a low supply of renovated homes and a high demand from Buyers. Easy access to transportation, parking and shops/restaurants/services will all be factored into how much a Buyer will be prepared to pay.
Timing is everything! While you’re renovating, you need to remember your carrying costs: mortgage, insurance, taxes and utilities. If it takes you 12 months instead of 6 months to complete the project, your costs have just gone way up (and you’ll be paying those costs out of your profit margin.)
Stay on top of your trades! If you aren’t a contractor yourself, make sure you align yourself with someone you know, like and trust. Their ability to manage costs and a timeline will impact your profitability, and if your contractor does shoddy work, you’ll feel that in your pocketbook.
Focus your renovation dollars in the right places! For example, kitchens, bathrooms, floors. You’ll likely have unsexy money to spend too, and don’t forget that the Buyer who buys the renovated house doesn’t want to worry about the furnace, the electrical or the roof either.
Always remember your target Buyer! If you’re looking to sell your renovated house for $800K, remember that Buyers at this price point will have definite expectations of features and finishes. Too often we see cheap flips that don’t sell because of poor quality materials and workmanship.
Permits, Permits, Permits! No, you can’t just tear down walls and change out the knob and tube electrical because you want to. Most buyers will want to see that your renovation was done on the up-and-up, and that means permits (and permit headaches). Buyers will pay more for a home that was renovated with permits.
There are no guarantees! Yes, some people make a lot of money flipping houses in Toronto, but not everyone makes a profit.
Treat this as a job! Don’t fool yourself: flipping a house for profit takes a lot of time. You’ll be picking finishes, managing workers and timelines and need to check in on the progress frequently.
Stick to the plan/budget! This isn’t the time to get creative and make it up as you go along.
Make sure you work with a REALTOR who has experience guiding people through the flipping process. As always, we’d be happy to chat!
Do you have what it takes?
Whether due to houses, condos, or simply paperwork, if in the end you’re receiving a profit, then technically you’re flipping the property. Some people believe they can flip a house without even breaking a sweat. Don’t be fooled. It won’t work out just because you may have a good stable job, trust in getting a good mortgage, put a small amount of money down, renovate on the weekends, and then sell. House flipping is a full planning process that you shouldn’t take lightly.
The art of renovating homes is a tough dedicated job. It involves being realistic and making a budget, knowing how and what to renovate, what price to charge, whom to hire, and how long it will take. Also, you must know your margins and timelines— otherwise, profits may suffer. But what if there was an option to flip your home without all the hassles and risks?
LEARN ABOUT NEW FAST FORWARD WEALTH PROGRAM ~ GUARANTEED HOME SELLING SYSTEM DESIGNED TO GET OWNERS MINIMUM 25% OVER CURRENT MARKET VALUE OF YOUR HOME!!!
As the owner of a property with development potential, which is usually old and in need of renovation or rebuild, choosing to sell it to a builder or developer you earn a fraction of the potential profit locked in your property.
Understandably, most people don’t have the time, money, expertise, or desire to do the work required to unlock all the profit built up in their property.
It’s way too risky, trades don’t show up, do poor work, or simply rip you off, trying to get the money to do the job, knowing what to build, dealing with the upheaval and stress a project like this will have on your life and relationships.
So instead of receiving the full benefits and wealth built up in your property, a builder or developer buys it, gets financing, builds on it, and sells the property making handsome profits; Profits that could be yours.
While you do what you love to do in life, you have a trusted experienced development team to partner with that would reduce your risk and do all the work to unlock all the profits in your property? What if your partner managed, financed, designed, built, and directed the sale of your property for maximum profits as if it were their own?
FIXNFLIP works with you to finance and develop your property’s full potential, then manages the sale for maximum profit. The additional profit is split 80/20 between you and FIXNFLIP (80% going into your pocket) Upon the sale you enjoy your share of the additional wealth generated from the development of your property
~3 STEP PROCESS~
Your property is appraised to determine market value as of today. This is approximately how much you would make if you sold the property on the market today. Less sales commission, this is your base valuation. When your property sells, you get paid this base valuation plus your share of the additional profits generated from the development and sale of your property.
FIXNFLIP arranges financing, designs/builds, and manages the sale of your developed property for maximum profit. FIXNFLIP arranges financing for the project through a mortgage on your property. We design for maximum profits and maximum architectural beauty. Our team is led by respectful builders with decades long experience. We oversee and direct all aspects of the marketing and sales process to achieve maximum profit.
You get paid the base valuation plus your share of the profits generated from the sale of the developed property. When your property sells, mortgages and commissions get paid. Then you get paid the base valuation, the amount you would have earned if you would have sold the undeveloped property, plus your 80% share of the profits generated from FIXNFLIP’s development of your property.
Here is an example for a property with an appraised value of $1mil and an existing mortgage of $500k.
Step 1: The home gets independently appraised. Let say the valuation comes in at $1mil, FIXNFLIP does not value closing costs only what the home owner will walk away with in their pocket after the sale. So we deduct closing costs to get the FIXNFLIP valuation.
$1,000,000 x (.05 commission + h.s.t.)= $56,500.00 commission
$56,500 commission + legals approx. $2000 = $58,500 closing costs
$1,000,000 sale price – $58,500 closing costs = $941,500 FIXNFLIP property valuation
$941,500 – mortgages owing $500,000 = $441,500 Clients walk away profit based on a $1mil sale if she sells the house as is.
Step 2: With a $200,000 FIXNFLIP renovation, you sell the home 3 months later for $1,500,000
$1,500,000 renovated sale price x (.05 commission + h.s.t.) = $84,750 commission
$84,750 commission + legals approx. $2000 = $86,750 closing costs
$86,750 closing costs + $200,000 mortgage for renovation = $286,750 total project cost
$1,500,000 renovated sale price – $286,750 total project cost = $1,213,250
$1,213,250 – $941,500 FIXNFLIP property valuation = $271,750 total profit generated from renovation
271,750 profit x .80 (Clients profit split, 80% of the total profit from renovation) = $217,400 Clients profit from the renovation.
Step 3: The Client gets paid; in this example the client would have made a profit of $441,500 if they would have sold the house on the market without FIXNFLIP.
In 3 months working with FIXNFLIP the client makes $658,900 in profit, the FIXNFLIP program earned her an additional $217,400 within a 3 month period.
TAKE THE GUESSWORK AND BURDEN OUT OF RENOVATION FOR RESALE! MAXIMIZE THE FULL POTENTIAL OF YOUR PROPERTY WITH FIXNFLIP’S FAST FORWARD WEALTH PROGRAM! GET IN TOUCH WITH OUR TEAM AND LET’S START A CONVERSATION ABOUT WHAT RESULTS YOU CAN ACHIEVE TODAY!
For more information on how to benefit from this program, please contact Minee Nehru, Realtor with RE/Max West Realty Inc. at 416.282.2444