“We’re finishing up everything on the properties we bought a year or more ago. “The math doesn’t make sense right now for flipping,” Mr. Cai says he personally wouldn’t bank on doing a resale flip for the next year or two. Currently, given the sinking home prices – down 19 per cent in Toronto compared to February 2022, according to the Toronto Housing Market Report – combined with high construction costs and the competition for increasingly expensive tradespeople, Mr. Cai began advising his investor clients not to buy anything with the intention of flipping and just watch to see what’s marketable. When Toronto house prices continued to soar last year, Mr. That translates into getting the maximum resale value.” I can tell them that in this neighbourhood, it’s good to add another bedroom on the second floor, or that according to the last 10 sales, projects with a waterfall staircase worked out really well. “So, we bridge that gap between the designers, architects, engineers and the market. People often think it's like the TV shows on house flipping.“Investors don’t know the market as well as we do, because we work with the resale side,” Mr. There are some similarities and there is definitely drama, but never does it go as smoothly as shown on TV. Nor are the profits like they lead you to believe. They show gross profit, if they show anything. There are usually a LOT more expenses of carrying a property and unless you're a larger company, you also cannot get their pricing for labor and materials. I search for houses with very specific criteria, in specific market areas. These houses are usually not currently for sale. I am looking for houses I can buy at approximately 65% of the market value, or less. Either the owner or the house usually has some type of distress. The house may be in disrepair, totally outdated, have a leaking roof, or something that requires a substantial investment of money. I contact owners, and see if they're willing to sell to me.Įxamples are divorce, death in the family, inheritance, or pending foreclosure. I have to buy at a price where I can make all of the necessary improvements, cover carrying costs of taxes, insurance, utilities, etc., and still make a decent profit for the time spent. Because you can never be certain of the exact expenses, you have to build in a cushion for unknown expenses and time. Once I make a deal, I close on the property and make the budgeted renovations. The scope of the renovations depend upon the price of the house and the other houses in the neighborhood. You do not want to over or under improve. Once complete, then the property is put on the market and sold. The difference between what I sell it for, less selling costs, buying costs, carrying costs, and renovation costs, equals my profit. A Day In The LifeĮvery day, I search for new opportunities to buy a house. The market is competitive, so you must always be looking. It may take several months to convince the owner to sell, so you should always have a pipeline of houses you're working on (to earn a living). These houses are typically not listed for sale, so you cannot look with a Realtor or on. Houses that are already on the market will not usually be good deals for a house flipper. I buy lists of houses/owners that have specific criteria, including how long they've lived in the house, how old the house is, how much equity is in the house, the age of the house, etc. All of this information is available through list sellers. You must also specify your desired zip codes. We send a letter to these addresses, usually every 6 - 8 weeks, asking if they're interested in selling. You have to mail repeatedly and hope that when they are ready to sell, you're mailer was recently delivered and they act on it. We also try to find a phone number for each owner.
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