How to Avoid House Flipping Failures

Buying an undervalued house that needs work, fixing it up, then selling it at a profit can be a great way to make money. But for every flip that ends in fortune, there are plenty that end in failure. Here’s some advice to help you avoid losing money.

• Make sure you can afford to do this. Buying and selling property is expensive. Sure, you can borrow the money, but then interest payments eat into your profits. The best way to get into flipping is to start saving today! If you can afford to pay cash, your costs are dramatically lower. But even then, you still have to pay for more than what you paid for renovations, property taxes, utilities and capital gains.  Remember, the only way to make money is to sell the property for more than what you paid PLUS all these additional costs.
• Know what you’re getting into. Study the market so you recognize a good deal when you see it. Consult with real estate professionals to find a property and neighbourhood that have renovation potential. Know which renovations are worthwhile and which aren’t. Understand what price the completed property will be worth. Prepare a detailed budget and stick to it.
• Bring renovation skills to the table. Flipping properties takes a lot of time and many technical skills. If you have to pay tradespeople to do the work for you, there’s little chance you’ll make a profit.
• Be patient. If you finance the purchase, every month costs you money. So you’re tempted to rush through every step, and if the property doesn’t sell fast, you end up discounting the price. But if you can afford to pay cash (or make a big down payment), you can afford to wait until exactly the right property comes along, take the time to research it fully, do quality improvements, then put it on the market and wait until a buyer meets your price. 

  If you’d like to be connected with a trusted local real estate professional who can help you profit from flipping properties, give us a call today.

Kupina MortgageTeam  905.730.4782 – mark@kmortgage.ca