Flipping houses in Nanaimo
I haven’t seen the trend start just yet, but I’m sure it’s coming. When the market goes through a strong upswing in value, as it has started doing this year, a situation is created where flipping houses starts to become a viable money making plan…
Nearly everyone has spent some time watching those house flipping shows on TV so some feel they have gained useful knowledge from it. I’m not going to say that learning useful things from such shows isn’t possible, but I will say that it’s really hard to separate the wheat from the chaff. There is some good info there but also a lot of fluff that is there for the purpose of creating an entertaining narrative with the goal of good ratings. These shows are there to get people to watch them, period. It is easy to forget that they are not getting more viewers by presenting honest, thoughtful, realistic perspectives and advice, but by being entertaining first and foremost. If there is a reality TV show about whatever your profession might be, perhaps you get where I am coming from.
Speaking as someone who has seen success and failure and the grey areas in between with regards to house flips, I believe I have managed to identify key areas of knowledge that should be covered to maximize your chances of success. It goes without saying, or at least it should, that there is a pretty big financial risk taken when flipping a home and there are a lot of things to take into account and balance in order to make it work. If it does work, however, you might just end up retiring early.
The way I see it, you’ll want to make sure you have a solid grasp of all three of the following areas in addition to having professional level knowledge, or close to it, in one of them.
Guidance in the other areas you are less familiar with can be gained by choosing the right professionals:
Financial: People such as Mortgage Brokers and Financial Advisors are the ones to talk to. If you are not some sort of financial professional you should be talking to those who are to make sure all your ducks are in a row financially before getting started. Were I to try a flip, I would be talking to these professionals too. As a Realtor, I have a solid grounding in the basics but the financial pros have a way of surprising me with clever, useful, tricks no matter how much I think I have already learned from them.
Real Estate Markets: Yours truly would be the one to talk to about whether the market timing is right for this. Understand that there are no guarantees exactly how long prices will go up and how much they will go up by. Anyone telling you that there is a guarantee of either up or down on the way, is someone you should stay far, far away from. On one end of the spectrum we have that kind of Realtor who will say whatever nonsense to push you to buy or sell a property, and on the other we have the constant prediction of an apocalyptic real estate market crash coming from a media outlet. They know drama sells papers and gets viewers. Stay away from both.
There is some solace in knowing what the historical pattern has been though. You get about 6 or 7 years or up and about 6 or 7 years of down/not going much anywhere.
The good news is that if you don’t get the flip done before the markets stop going up there is a plan b that should work if you haven’t already over extended yourself financially. That being, rent it out until things start to go up again or better yet, rent it out for longer and make more money. My general recommendation is that you plan to be able to hold on to a property for 5-10 years as your plan B, and in this case we are likely talking about renting it utnil market conditions come back. It’s a pretty safe bet if you are patient and have done your financial homework.
But it’s not all just about timing. You’ll also want to know about what’s popular in the market these days, what are some good ways to easily add value to a given property, knowing which properties are being overlooked by the market and why which could turn out to be a big money maker for you. There is much more to explore here but you get the idea. All of these things combine to tell you what kind of property to be looking for at what price and how you should renovate it to maximize your payback.
Building/renovation: It’s one thing to know that something needs to be fixed, repaired or updated. It’s another thing to know what is involved in doing it. It’s yet another thing to be able to do that work properly. And oh boy, have I seen a lot of people cost themselves a lot of money by cutting corners on this stuff.
As a Realtor, I would say I am pretty comfortable with the knowing what needs to be fixed and what is involved in doing it. I spend my looking at houses every day and deciding what their value is and what would be required to bring out their potential. However, I am not going to pretend, even for one minute that this is the same thing as being able to actually do all that work myself. There are finer details in any job that, although typically simple, only someone with hands on experience knows about. I would suggest that if you are working on the property yourself that you have more handyman knowledge than I or at least are honest with yourself about what your limits are in terms of skill and what the costs are going to be.
If I had to pick one of the three areas of knowledge as the best bet for making money off of a flip, it’s going to be reno/building knowledge. The reason being that it’s the one that allows you to cut costs the most without raising much extra risk. By doing much or most of that work yourself, you’re saving on the most expensive part of the process, which is labour. You can also make sure that the work is done properly assuming your knowledge level is high enough.
And that my my starter kit for house flipping. For the full package and walkthrough you’ll of course have to contact myself and whichever of the other kinds of professionals mentioned above that you’ll need services from. If you don’t have any in mind, I certainly have connections and can give you some leads on people who might just be the right fit.