How to Flip a House
With the many television shows showing people who buy old houses and fix them up to sell at a profit, there are an endless number of people who wish they could do that. It looks like easy money on tv. Heck they buy a house that is half price because it is dirty, they hire slave labour to pull out the carpets and cupboards, the hire a cheap contractor to put it all back in new, then they grind that contractor and try to pay him only half of what they agreed to, then they put a coat of paint on it and host an open house before it is even dry, selling it for a $50k profit! What could be easier????
The reality is that flipping a house is nothing like that at all. First off, every seller will try to get maximum dollar for their house and not be anxious or eager to sell it to you at a huge discount. Even bank reposessions will have an appraisal and are legally obligated to try to get that amount for the property. The likelihood of getting a property in Lethbridge for even 10% to 15% below appraised value is virtually zero.
Secondly, contractors in Lethbridge get paid pretty well. You wont find cheap labour to do the grunt work on your renovation project. Even our tradespeople who do a little work afterhours or on weekends will want darn close to their trade wage. You might find some unemployed unskilled labour, but thats about the best you can hope to get a deal on.
When it comes to renovations, our building materials are not cheap. If you buy from our home renovation stores you will discover that only contractors are eligible for a contractors discount. You flipping one house is not going to get you much savings.
When it comes time to sell, our buyers in our market are smart. Our buyers have lots of easy information and advice at their finger tips. If you are selling a shoddy renovation or a house with a nasty history, they are going to know or are going to find out pretty quickly. Nobody is going to pay you more than it is truly worth at market value, especially if it is obviously a flipped house.
Lastly, there are lots of expenses that the home renovation and flipping shows intentionally do not disclose. What about legal fees? To buy that house is going to incur legal fees, as there will be again to sell it. Thats likely going to total $2500. What about property taxes? What about a real property report or land survey? What about a municipal compliance certificate? What about land title fees? What about financing costs and payout penalties on borrowed money? What about capital gains taxes on any profit you end up with after all these expenses are paid?
These are just some of the issues that you would need to consider before you start flipping lethbridge real estate. I have personally done or participated in, or assisted clients with dozens of house renovations and property flips here in Lethbridge. I have watched people make many mistakes and seen lots of people make lots of money. If you are interested in flipping property and want to discuss some strategy, give me a call.
Robert W May is a Real Estate Broker in Lethbridge Alberta, having now been in the industry for over 23 years. . He was also a licensed Lethbridge mortgage broker and financing expert with Canada First Mortgage of Calgary Alberta for the past 10 years. He is an industry leader always willing to help train and educate others in how to improve their business models for financial and personal benefit.