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How to Flip A House and Actually Make Money!
Hey there! Are you ready to dive into the wild world of house flipping? Great, because I’ve got everything you need to know about how to flip a house and actually make money.
Before we get started, let me introduce myself. I am Sean Rampersaud and Edmonton based mortgage broker and house flipper, and I’ve been in the real estate game for a while now. I’ve flipped countless houses, and let me tell you, it’s not for the faint of heart. But if you’re willing to put in the work and take some risks, it can be a great way to make some serious cash.
So, without further ado, let’s get into the nitty-gritty of how to flip a house and actually make money.
Step 1: Find a good realtor
First things first, you need to find a good realtor to work with. And let me tell you, not all realtors are created equal. You want to find someone who has the time and energy to do a lot of searching for you, but who isn’t too busy to give you the attention you deserve. You don’t want to work with a hotshot realtor who’s too busy closing million-dollar deals to give your little flip the time of day.
When you’re interviewing potential realtors, make sure you ask them if they’re willing to negotiate on the sell side. Let them make all of the upfront commission and sell for a discount. This will help you save some money and increase your profits in the end.
Step 2: Do your research
Once you’ve found a realtor you like, it’s time to start doing your research. Have the agent do multiple market evaluations of what the property is worth now vs what it would be worth renovated. This will give you a good idea of what kind of profit you can expect to make.
Step 3: Make lowball offers
Now, it’s time to start making offers. And let me tell you, the lower you can go, the better. The more you save on the purchase price, the more money you’ll have in your pocket at the end of the flip. Don’t be afraid to make lowball offers, but be prepared for some pushback from the seller.
Step 4: Create a budget
Once you’ve found a property and negotiated a good price, it’s time to create a budget. This is where things can get tricky, because it’s easy to overspend and eat into your profits. Create a spreadsheet with estimated costs for the property you choose, including things like flooring, painting, and any other renovations you plan to do.
Step 5: Order supplies in bulk
When it comes time to order supplies, make sure you do it in bulk. Order everything from one place, like Home Depot or Lowe’s, and have it delivered. This will save you time and money in the long run.
Step 6: Protect yourself
Before any work begins, create a document for every trade to sign that will protect you if a trade gets hurt onsite. Not everyone has insurance, so it’s important to protect yourself in case of an accident.
Step 7: Get multiple quotes
For every job, have at least four quotes from tradespeople. Sometimes I even have them quote in front of each other to see who can give me the best deal. Don’t be afraid to haggle and grind them down on price. And make sure any and all extras are included in the quotes, because tradespeople love to upcharge.
Step 8: Don’t hire anyone for the entire job
One rookie mistake many first-time flippers make is hiring one person to do the entire job. This can lead to delays and cost overruns. Instead, create urgency by giving tradespeople deadlines and having multiple trades in at the same time.
Step 9: Don’t forget about the exterior of the house!
Curb appeal is important and can greatly affect the overall value of the property. Consider investing in landscaping, adding a fresh coat of paint to the front door, and replacing any outdated or worn-out fixtures.
Step 10: Take advantage of online resources
Like Houzz and Pinterest to get inspiration for design and decor ideas that will appeal to buyers. However, remember to stay within your budget and avoid overspending on unnecessary upgrades.
When it comes to choosing finishes and fixtures, don’t skimp on quality. Low-quality materials may be cheaper upfront, but they can end up costing you more in the long run if they wear out or break easily.
Keep an eye on the local real estate market and adjust your strategy accordingly.
If there is a high demand for a certain type of property or feature, consider incorporating it into your renovation plans. On the other hand, if the market is oversaturated with similar properties, be mindful of pricing and don’t overestimate the value of your home.
Build a strong network of reliable contractors and tradespeople.
Ask for referrals from friends and family, read reviews online, and don’t be afraid to negotiate prices. Building strong relationships with tradespeople can help ensure that the work is done on time and within budget.
Don’t forget about the details!
Small touches like fresh flowers, scented candles, and fluffy towels can make a big difference in how buyers perceive the property. Consider hiring a professional stager to help showcase the home in the best possible light.
Be prepared for unexpected expenses and setbacks.
It’s impossible to predict every issue that may arise during a renovation, so it’s important to have a contingency plan in place and set aside a buffer of funds to cover unexpected costs.
Don’t get too emotionally attached to the property.
Remember that flipping houses is a business, and your goal is to make a profit. Be willing to make tough decisions, like cutting back on expenses or lowering your asking price, in order to maximize your return on investment.
Be patient and persistent.
Flipping houses is not a get-rich-quick scheme, and it can take time to find the right property, complete the renovations, and sell the house at a profit. Stay focused on your goals and be willing to put in the hard work and effort required to succeed.
Finally, don’t forget to celebrate your successes!
Flipping houses can be a challenging and rewarding experience, so take the time to appreciate your accomplishments and reflect on what you’ve learned. Whether you’re a seasoned pro or a first-time flipper, there’s always room to grow and improve your skills. So go out there and flip some houses!
Consider the neighborhood
Don’t over-renovate your property if it’s not going to match the surrounding properties or the general vibe of the neighborhood. You don’t want your house to stick out like a sore thumb and turn off potential buyers.
Plan for contingencies
Unexpected expenses can come up during any renovation project, so it’s important to have a contingency plan and budget. Set aside 10-15% of your total budget as a contingency fund, just in case something goes wrong.
Market your property strategically
Once the renovation is complete, it’s time to put your property on the market. Work with your real estate agent to come up with a marketing plan that will attract the right buyers. This might include professional photography, staging, virtual tours, and targeted online advertising.
Be open to negotiation
When offers start coming in, don’t be too rigid in your negotiation strategy. Be open to offers and counteroffers, and work with your real estate agent to find a deal that works for both you and the buyer.
Don’t get emotional
It’s easy to get attached to a property, especially after you’ve put so much work into it. However, when it comes to selling, it’s important to take emotions out of the equation. Look at the property as a business investment and make decisions based on what’s best for your bottom line.
Learn from your mistakes
Even the most experienced flippers make mistakes. Take note of what worked and what didn’t during your renovation and selling process, and use that knowledge to improve your next flip.
Stay up-to-date on market trends
The real estate market is constantly changing, so it’s important to stay informed about current trends and conditions. This can help you make informed decisions about when to buy, renovate, and sell your properties.
Build a network of professionals
As you continue to flip houses, it’s helpful to build a network of professionals who can help you along the way. This might include real estate agents, contractors, designers, and lenders.
Always have an exit strategy
Flipping houses can be a lucrative business, but it’s not without risks. Always have an exit strategy in place in case something goes wrong. This might include renting the property out, selling it to a different type of buyer, or even holding onto it long-term as a rental property.
Enjoy the process
While flipping houses can be stressful at times, it can also be a fun and rewarding process. Enjoy the challenge of taking a run-down property and turning it into something beautiful, and don’t forget to celebrate your successes along the way!
Ah, flipping houses. It’s a game that many have tried to play, and many have won big. But like any game, there are always two sides to the coin. That’s why today, we’re going to talk about the pros and cons of flipping houses.
Profit, Profit, Profit – Let’s face it, the biggest reason most people get into flipping houses is to make a profit. And if you play your cards right, you can make some serious cash. The key is to buy low, renovate smart, and sell high. It’s a simple formula, but it takes some serious skill to get it right.
Creative Outlet – Flipping houses is a great creative outlet. You get to take a run-down, outdated property and turn it into something beautiful. Whether it’s a fresh coat of paint, a new kitchen, or a complete overhaul, the sky’s the limit when it comes to designing your flip.
Control – When you’re flipping a house, you’re in control. You get to call the shots on everything from the color of the walls to the type of flooring you use. It’s a lot of work, but it’s also incredibly rewarding to see your vision come to life.
Learning Experience – Flipping houses is a great way to learn about real estate. You’ll learn about the market, financing, and construction. It’s like getting an education in the school of hard knocks.
Quick Turnaround – Flipping a house can be a quick process. From start to finish, a flip can take as little as six months. That means you can get in, make your money, and get out. It’s a great way to generate cash flow in a short amount of time.
Financial Risk – Flipping houses is not for the faint of heart. There is a lot of financial risk involved. You have to be willing to invest a lot of money upfront, and there’s always the chance that the market could turn on you.
Time-Consuming – Flipping a house is a lot of work. There are a lot of moving parts, and it takes a lot of time and effort to manage everything. You have to be willing to put in the time and effort to make it work.
High-Stress – Flipping a house can be incredibly stressful. There are a lot of deadlines to meet, and if you’re not careful, things can spiral out of control quickly. It takes a lot of mental toughness to handle the pressure.
Physical Demands – Flipping a house is hard physical work. You have to be willing to get your hands dirty and put in some serious sweat equity to get the job done. It’s not for the faint of heart.
Competition – Flipping houses is a competitive market. There are a lot of other flippers out there, and they’re all vying for the same properties. You have to be willing to fight tooth and nail to get the deals you want.
Common questions about flipping houses in Canada:
How do you flip a house in Edmonton?
Flipping a house in Edmonton is not much different from flipping a house in other places. It involves buying a property, renovating it, and then selling it at a higher price. However, there are some things to keep in mind when flipping a house in Edmonton:
Location: Edmonton is a large city, and the housing market can vary widely from neighborhood to neighborhood. It’s essential to research the location and choose a property that is in an up-and-coming area.
Market analysis: It’s crucial to analyze the market and determine what types of properties are in demand. This will help you to make informed decisions when it comes to purchasing a property.
Renovation costs: Renovation costs in Edmonton can vary depending on the property’s location and condition. It’s essential to have a solid understanding of the renovation costs to determine whether the flip will be profitable.
Selling price: The selling price of the property will determine how much profit you make. It’s important to price the property correctly to attract buyers and maximize your profits.
Can you make good money flipping houses in Alberta?
Yes, you can make good money flipping houses in Alberta. However, as with any investment, there are risks involved. Flipping houses requires a significant amount of capital, time, and effort, and it’s not a guaranteed way to make money. It’s essential to do your research and approach each flip with caution to minimize risks and maximize profits.
How much does a house flipper make?
The amount of money a house flipper makes can vary widely depending on several factors, including the location of the property, the condition of the property, the renovation costs, and the selling price. According to a report by ATTOM Data Solutions, the average gross profit on a flipped property in Canada in 2020 was $44,000. However, this number can vary widely, and some flips may result in a loss.
Is flipping houses hard?
Flipping houses can be challenging, and it’s not for everyone. It requires a significant amount of time, effort, and capital to be successful. Flippers must be knowledgeable about the housing market, renovation costs, and real estate laws. They must also be able to manage contractors, handle unexpected issues that arise during the renovation process, and market the property effectively. However, with the right knowledge and approach, flipping houses can be a lucrative investment strategy.
How much money do you need to flip a house?
The amount of money you need to flip a house can vary widely depending on several factors, including the location of the property, the condition of the property, and the renovation costs. In general, flippers should have enough capital to cover the purchase price of the property, renovation costs, holding costs (such as mortgage payments, property taxes, and utilities), and selling costs (such as realtor commissions and closing costs). It’s recommended that flippers have at least 20% of the total project costs in cash to cover unexpected expenses. The exact amount of money needed to flip a house will depend on the specifics of the project.
Is House Flipping Legal in Canada?
Yes, house flipping is legal in Canada. House flipping is the act of buying a property, renovating it, and then selling it for a profit. As long as you follow all the rules and regulations regarding buying and selling properties in Canada, you can legally flip a house.
What is the 70% Rule for House Flipping?
The 70% rule is a guideline used by many real estate investors and house flippers to determine the maximum purchase price they should pay for a property they plan to flip. The rule states that the total cost of buying, renovating, and selling a property should not exceed 70% of the property’s after-repair value (ARV).
For example, if a property’s ARV is estimated to be $500,000, then the total cost of buying, renovating, and selling the property should not exceed $350,000 (70% of $500,000).
How Do You Flip a House for Beginners in Canada?
If you’re a beginner looking to flip a house in Canada, here are some steps you can follow:
Research the market: Before you start looking for properties to flip, research the local real estate market and identify areas where you can find properties that are undervalued and have potential for appreciation.
Find a good real estate agent: Working with an experienced real estate agent can help you find good deals on properties and provide valuable insights into the local market.
Secure financing: Flipping houses can be expensive, so it’s important to secure financing before you start looking for properties. Talk to your bank or a mortgage broker to find out what financing options are available to you.
Find a property: Look for properties that are undervalued or in need of repairs. You can find properties through real estate listings, auctions, or by networking with other investors and real estate professionals.
Renovate the property: Once you’ve purchased a property, it’s time to renovate it. Make sure you have a detailed plan and budget in place before you start the renovation process.
Sell the property: Once the renovations are complete, list the property for sale with the help of your real estate agent.
What is the Anti House Flipping Law?
The anti house flipping law, also known as the property flipping rule, is a regulation implemented by the Canada Mortgage and Housing Corporation (CMHC) to reduce the risk of mortgage fraud. The rule prohibits homebuyers from obtaining mortgage insurance for a property that has been owned by the seller for less than 90 days.
The rule is meant to prevent speculators from artificially inflating property values by buying and selling properties quickly, and to protect homebuyers from purchasing properties that may have been overvalued.
Can Foreign Buyers Flip Houses in Canada?
Yes, foreign buyers can flip houses in Canada as long as they follow all the rules and regulations regarding buying and selling properties in Canada. However, foreign buyers may face additional taxes and fees when purchasing and selling properties in Canada.
Tax on House Flipping in Canada
In Canada, any profit made from flipping a house is subject to capital gains tax. The capital gains tax is calculated based on the difference between the purchase price and the selling price of the property, minus any expenses incurred during the renovation process.
The capital gains tax rate varies depending on the individual’s tax bracket and the amount of profit made from the sale of the property.
What Expenses Can I Deduct When Flipping a House in Canada?
When flipping a house in Canada, you can deduct any expenses incurred during the renovation process from your taxable income. Some common expenses that can be deducted include:
- Renovation costs: Any costs associated with renovating the property, such as materials, labor, and permits
Another important thing to keep in mind when flipping houses in Canada is the tax implications. Flipping a house is considered a business, so any profit you make is subject to taxation. It’s important to keep track of all your expenses and revenue, and to report them properly on your tax returns.
In terms of expenses that can be deducted when flipping a house in Canada, there are a number of things to consider. Any costs related to purchasing the property, such as legal fees, land transfer taxes, and real estate commissions, can be deducted. Renovation costs, including materials and labour, can also be deducted. Additionally, any costs associated with holding the property, such as property taxes, insurance, and mortgage interest, can be deducted as well.
It’s important to keep detailed records of all your expenses, and to work with a tax professional to ensure you are claiming all the deductions you are entitled to. Failing to properly report your expenses and revenue can result in penalties and fines from the Canada Revenue Agency (CRA).
In terms of the anti-house flipping law in Canada, there is no specific law that prohibits house flipping. However, there are regulations and restrictions on certain types of renovations and developments, particularly in areas with high demand for affordable housing. It’s important to research the local zoning and bylaws in the area where you plan to flip a house, to ensure that you are complying with all regulations.
Overall, while there are certainly risks and challenges associated with house flipping in Canada, it can be a lucrative and rewarding business for those who approach it with care and caution. By doing your research, working with experienced professionals, and staying on top of legal and tax requirements, you can increase your chances of success and profitability.
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