Make Money!

If you’re planning on renovating a property to flip for profit, there are several things to keep in mind to ensure you invest wisely and achieve your goal. With good research, a sound purchase and clever renovations, property investment can be a profitable business. Consult this guide for advice on making money from bricks and mortar.

Good Research

Research the market

Make contact with a knowledgeable local real estate agent and talk to him to acquire some of the knowledge you’ll need. These are some of the factors you should consider to find out information about the area you’re buying in.

 

· Look at social demographics. Due to an increased divorce rate and an ageing population, the number of single people wanting homes is rising rapidly.

 

· Consider the supply and demand factor. What type of market are we currently in? Low interest rates and low unemployment have made buying a home more affordable than ever.

 

· Don’t go too far afield. Stick to the areas you know and research them thoroughly

 

· Target your development. Ask yourself, does your idea really fit the market? Does it fit into the locality you have chosen? More importantly, does it fit the basic ways in which people aspire to live in that locality and type of house?

 

· Look at what your customer wants. Young professionals and affluent older couples without children or dependants seem to prefer stylish, downtown apartments or townhouses near the places they want to spend money. Look at current fashions and consider the type of accommodation that will maintain its value because of its quality and locale. Families need successful neighbourhoods, where there are good schools, good transport, safe environments and sufficient parking. They need more space, inside and out, and lower running costs, but they still want good design.

Research the Reno.

Get cost estimates for specific jobs so that you can analyze properties to determine if there is any profit in them.

 

Be realistic about both your time and ability and determine what jobs you can perform yourself and which ones you need to hire trades people to do for you. Remember, often 50-60% of a jobs cost is in labour, so if you can do it yourself, that $20,000 kitchen could cost under $10,000. But don’t bite off more that you can chew.

 

Talk to Roofers, timber and damp specialists, HVAC and electricians to get estimates for typical jobs. This will enable you to put budgets together quicker. For a list of typical renovation costs, click here.

 

For a good first experience of renovating, try doing up a dated property rather than a complete wreck. A new kitchen, bathroom, furnace, flooring and re-decoration will miraculously transform something dark and decrepit in a “hot property”

 

You can always leave the architects, specialists and planning departments to another time when your confidence and funds are more plentiful.

The 10 Quickest ways to make money on you property.

Whether you’re selling your home or just making it more appealling to live in, follow these 10 simple tips to add value to your home.

 

The ultimate list of ways to increase the equity in your home.

 

  • GLAMS – Glamorous Lifestyle Accessory Must-Haves
  • Paint and Clean your home
  • Modernise your Kitchen
  • Make space – create storage
  • Finish unfinished jobs
  • Give the front a facelift
  • Bring light into your home
  • Knobs and knockers
  • Bed linen and soft furnishings
  • Update light fixtures

Choosing a property

Before you buy, explore different ways of achieving that all important profit.

 

· Minor improvements. A general decorative overhaul can push up the value of a property, without    involving architects, planners and a big investment.

· Converting a property. The conversion of a house into, for example, a legal duplex is more complicated.

 

You should never buy on the assumption that a change of use is possible without serious research into the planning issues and a detailed conversation with the local planning department. Many sales like this are achieved only when they are “conditional on planning approval”, that is the deal only becomes firm when planning permission is granted.

 

Once you’ve decided the type of renovation project you want to undertake, it’s time to start looking for properties. You can use MLS.ca, look in the paper or drive neighbourhoods but by far the most efficient way to look for homes is to hook up with a local REALTOR™.

 

REALTORS® have access to property listings even before they are posted on MLS.ca and in a hot market, some properties are sold even before they are posted there.

 

Once we’ve established your parameters, as your agent I’ll make you aware of properties the second they are listed, so you have the opportunity to get the bargains.

 

Homes that have been on the market for a while could prove to be a good buy. Sellers may be willing to accept a low offer. Look for Estate Sales or repossessions. In a hot market such as we have recently experienced, many of the best value properties sell quickly, so be prepared to make an offer quickly.

 

Ensure that you’re not buying a money pit. In an older property you should be prepared for anything, right down to half the wall staying on the wallpaper when stripping or great holes behind the paneling. If time permits, don’t be afraid to make several visits with every type of tradesman in order to know what you’re letting yourself in for.

Sound Purchase

As with any investment strategy, the fundamental principal of property development is to buy low and sell high. Look for properties that, with the right approach, can be resold for a profit. Buy well and you limit your risk.

 

Once you’ve found the right property, it’s time to make an offer. As your REALTOR® I will put together an Agreement of Purchase and Sale and negotiate on your behalf so that you get the property at the lowest possible price and on the best terms for you.

 

Consider the asking price, is it reasonable? Often properties are priced cheap just to get them sold or encourage a bidding war, you don’t want to be put in that position.

 

Other items to consider in the purchase

 

Closing Date: Price may not be the only issue to the Seller. By being flexible on your Closing Date and accommodating the Seller, you can make your offer more attractive. Also, consider the planning of your renovation. Do you plan to live in the house while all the renovations are happening? Or can you afford to have the new house a week-month in advance then you can get all the jobs that are most disruptive done. After all, it’s always useful to have a functioning bathroom when you’re living in a house!!

 

Inclusions/Exclusions: Don’t loose a deal over a washing machine, you’re buying a house not an appliance. The closer you stick to the seller’s list of inclusions & exclusions, the more attractive your offer becomes.

Conditions: The fewer conditions you place in an offer, the “cleaner” it is and therefore is more appealing to the Seller. However, you don’t want to leave yourself exposed.

Clever Renovations

Target the Renovation – Targeting

Marketing Managers in Corporate Canada know the value of Target Marketing, and for a successful flip you’ve got to target market too.

 

You have to tailor your project so that the end product appeals to the type of person most likely to buy it. For example, converting a 3-bedroom family home into a 2-bedroomed one is generally not a good idea as you limit the number of people to whom the house has appeal.

 

Listen to Buyers. Buyers expect certain things at certain price points, find out what Buyers want and renovate to suit. What you want isn’t necessarily important if your goal is to renovate to flip.

Improvement

Typical Cost

Increase in

sale price

Average Return

Lighten & brighten

$86-$110

$768-$935

769%

Clean & de-clutter

$305-$339

$2,093-$2,378

594%

Fix plumbing, electrical

$338-$381

$922-$1,208

196%

Landscape & trim

$432-$506

$1,594-$1,839

266%

Staging

$812-$1,089

$2,275-$2,841

169%

Kitchen, bath upgrades

$1,546-$2,120

$3,823-$4,885

138%

Repair flooring

$1,531-$1,714

$2,267-$2,589

50%

Paint exterior walls

$2,188-$2,381

$2,907-$3,233

34%

Replace carpeting

$2,602-$2,765

$3,585-$3,900

39%

 

As your REALTOR® I’d be happy to discuss what Buyers are looking for with you and provide you with real life examples of flips that worked, and flips that didn’t.

 

Managing the project

 

A project manager will liaise with the builder and ensure work is carried out to specification. You could manage your own project or employ a general contractor. Remember to formalize your relationship with any project manager you may choose by having a written contract.

· Get all quotes well in advance, from flooring to carpenters. That way there are no surprises

· Never expect the scheduled timescales.

· Seek as much advise as possible, especially from people who’ve done it before

· Be prepared to live in a building site until things are settled

Employing tradesmen

Decide exactly what work you want to undertake before asking for any quotations. Write a clear specification; it need not be technical, but it should detail the work you want to carry out. Reputable builders will always want to do their best for you, right from the start.

If changes to the work being done are made (ie you decide to use granite instead of porcelain) make just you get a Change Order agreed upon between yourself and the tradesman specifying the change, and exactly what difference it will make to the previously agreed upon price.

Remember, your trades people should be people you feel comfortable working with, you should feel that you are able to communicate well together.

The regulations

Building control protects you and the general public by ensuring that buildings are safe and healthy places for people to be in. Check which alterations to a property will require building permits.

Planning and building

Major building work will almost always require a plan and the services of a building surveyor, building technician or architect, all of whom should be aware of the current regulations, the required inspections and how they apply to the work you’re undertaking. These regulations are updated regularly and mean that any builder must conform to certain standards of construction and workmanship.

Planning and zoning regulations determine what you can build. Building regulations control how you build it.

Both of these departments are located at City Hall on Brant street. Their web-site can be accessed by clicking here.


Lastly.................

 

Document everything you do from paint colours to trim styles. It'll make it far easier for your REALTOR® to put together a comprehensive sales brochure when it comes time to sell!

 

Want to find a home to fix and flip? Click here to get started.