The Flip phenomenon is stronger than ever thanks to specialized retrofit shows.
You have to pay attention to the statistics, which represent only sales made by brokers, as more and more people are selling themselves.
Indeed, according to the Federation of Real Estate Boards of Quebec (FCIQ), the number of sales identified as real estate flips has been on the decline for 4 years.
So do not worry, real estate being a pillar of the economy, the flip has always been there and will remain so.
It sounds so simple and easy on TV and the profit possibilities are so enticing that you too are determined to embark on the adventure. !
Perfect ! But first make sure you are well prepared to prevent your flip from flopping …
1. Find the rare commodity
You have to find a bargain. The price you pay for the purchase will inevitably have an impact on the profit achievable on the resale.
You need to know the market to be able to discern a good offer or not. “Paying too much” is the mistake that will have the biggest impact on the profits you make on your flip.
Consult and become an expert on a particular city or neighborhood instead of searching for deals across the province.
Search where most people don’t bother to search. Don’t just rely on brokers who send the same listing to many clients.
2. Don’t make it a Manor !
Here’s a mistake many investors make when they start. They are putting too much money into renovations.
Do not carry out renovations that will not allow you to recover all of your invested money.
Don’t spend unnecessarily on beautiful granite countertops when not needed.
4.Get your funding
Banks generally require a minimum down payment of 20%. Failure to provide the required amount will require mortgage loan insurance, offered by the Canada Mortgage and Housing Corporation (CMHC), among others.
To avoid mortgage loan insurance and the associated costs, you can partner with a partner.
You can get a renovation loan, a formula offered by several financial institutions.
Consider asking the financial institution to lend you, in part or in whole, an amount so that you can carry out the renovations. Thus, you will increase your available liquidity, which will help you to compensate for unforeseen events of all kinds and / or a resale period that is stretching somewhat.
5. Don’t be too optimistic
Establish 3 possible financial scenarios (a pessimist, a realist and an optimist). So, if you calculate to make a profit even with the most pessimistic scenario, your chances of success increase.
Plan to take into account any unforeseen events that may arise.
During a complete renovation, removing walls, it is not uncommon to discover surprises. At that point, you have to sort out the issues as you go and the expenses go up.
This is why it is essential that you allow yourself some leeway.
6. Insure your treasure
Be vigilant and insure your treasure as it should be. In the event of a major problem, your insurer may refuse to compensate you because the property is not adequately insured.
Complications don’t just happen to others and you could lose all of your dream profit.
7. Know the Law
Since 1 er January 2016, Quebecers must declare the sale of real estate when filing their tax return. So from now on, if you sell a house, you will have to report the transaction.
So while the glorious 2000s gave way to a much quieter residential market, the flip always turns out to be profitable as long as you are not too greedy.