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Flipping properties

Flipping Properties might be a very exciting goal for many people. First of all, it is creative, you will enjoy applying your ideas and designs.


But to do the house flipping right is a bit different than you see on TV reality show. Here are basic steps to do flipping house right:

1. Choose the right property


2. Do detailed comparable of the properties

similar to the one you are interested in


3. Create a budget


4. Stay within your budget!


5. Calculate all your expenses


6. Do it FAST!


7. Create or think about your back up plan

1. Choose the right property


It is pretty hard to find the property for the right price. The cheapest and the most beaten-down properties in bad neighborhoods are not the best buy. Have a realtor who will work with you and you will bet used to each other.
 

Educate yourself and find the best coaches able to give you the right information about flipping the properties.

2. Do detailed comparison of the properties similar to the one you are interested in.

Here is when your trusted realtor comes in.

3. Create a detailed budget.

 

You will need a good and again trusted contractor who will help you determine prices for renovations you are planning to do. Here comes also cooperation between you, realtor and your contractor (or you if you can do that by yourself).


Count not only renovation expenses but also mortgage expenses, closing expenses when you buy and sell, utilities, commission.
Expect of course more because as my friend said all renovations take 2x more money and 3x longer than calculated.

3. Create a detailed budget.

 

You will need a good and again trusted contractor who will help you determine prices for renovations you are planning to do. Here comes also cooperation between you, realtor and your contractor (or you if you can do that by yourself).


Count not only renovation expenses but also mortgage expenses, closing expenses when you buy and sell, utilities, commission.
Expect of course more because as my friend said all renovations take 2x more money and 3x longer than calculated.

4. Stay within your budget

 

Easier said than done. But the real investor has the budget and stays within the budget no matter what. If you are getting into a tight budget go for least expensive materials but what I would recommend don’t go for less expensive labor (contractor) unless you really know what to expect.

5. Calculate all your expenses

 

It was mentioned in “Create a detailed budget” but here are we again:

​

  • renovation expenses (material and labor) don’t forget about removal debris

  • landscaping

  • mortgage payments

  • closing costs

  • property taxes

  • mortgage insurance (CMHC – for Canadians)

  • utilities

  • count also your time to see if it is worth it

6. Do it FAST!

 

TIME is MONEY! I know that you can safe money on labor if you do all by yourself but think about that. If instead of 3 months the renovation will take you 9 months. You have to calculate 6 more months for your utilities, mortgage payments…

Another important thing is that your profit calculation should be based on the market when you bought your investment property.
What if the market will go down after 9 months you spent on renovation. It is not common that the real estate market crashes over the night but spent 6 more months can be crucial in regards to market conditions.

7. Create or think about your back up plan

​

Everybody has challenges in their lives. What if the market goes really down. Can you rent the property to cover your monthly expenses? Can you sell your home where you live and move to your renovated property? Do you have access to private investors to borrow the money if needed and the bank will not give you more?

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