Flipping homes has been all the rage over the last few years. This is partly due to the popularity of television shows like “flip or flop”, that turn dilapidated properties into money-making showstoppers in record time. The reality is you don’t get to see the actual behind-the-scenes from start to finish. The process of finding a home, fixing it, and then selling is not as glamorous and easy as it looks on TV, especially if you’re a rookie. However, you can be successful if you work with the right REALTOR® and know what to look for.
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Brush up on your 3 Ps
The flipping process can be tedious, so you’ll need a lot of “patience, perseverance, and problem-solving skills,” noted Khan. Try to hone these traits even before you begin to look for a home, so you’re prepared to handle potential roadblocks.
“Flipping is a business transaction and you are the business owner who manages everything,” said Khan. “You need certain soft skills and the ability to make smart decisions quickly to be successful. Also, don’t fear too much and don’t overthink either.”
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Research the market
It’s crucial you have some real estate knowledge and understand the market where you want to buy. This means narrowing down your search area to focus your research. Dig into market history, uncover buyer and neighbourhood trends and make sure to ask yourself these questions: What are the average sale prices? Are new developments cropping up? How long does it take for homes to sell on average?
Khan emphasized how important it is to “study the history of the market and look at current trends and predictions for the future.” Ultimately, using a REALTOR® to help you through the process is your best bet, as they’ll be able to give you insights and trends for a certain area using their market expertise, professional experience and access to data and tools.
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Be strategic about the neighbourhood
You can fix many things about a home, but you can’t change its location. According to Khan, “location determines your market value before anything else.” If you don’t pick a good community, you could end up with a property that generates no return on investment. You should generally avoid areas on the extreme ends of the low and high scale.
Look for property in a growing neighbourhood with lots of appeal and potential to scale. For first-time flippers, don’t seek out property far from where you currently reside. You’ll want easy access to the home, so you know exactly what it looks like before, during, and after the flip.
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Seek out expert opinions
Flipping a home isn’t a solo task. Work with a REALTOR® to help with your market research, property search, and purchase strategy. They can also help you understand property laws and regulations—for example, obtaining a zoning permit—and what you’ll need to do before starting actual work on the home. From electricians, plumbers, roofers to HVAC professionals, REALTORS® are also an excellent resource for finding trusted professionals in your local neighbourhood.
Before making an offer, you should also have the property inspected for potential issues not visible to the naked or experienced eye. This includes mould, roof problems, and foundation cracks.
Contractors, such as plumbers and electricians, will be able to provide you with a proper assessment of the home and give you price and timeline estimates. According to Khan, these experts will also help you avoid making mistakes that could void your insurance.
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Pick renovations that increase value
Not all fixes and updates add value to your property. Prioritize refurbishing the exterior, bathrooms, and kitchen.
“Kitchens tend to be a deal-breaker for a lot of buyers,” said Khan. “A home can have the best flooring in the world, but if the kitchen is slightly outdated, say by 10 years or more, it can bring the whole value down.”
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It’s not always about the big details either. The small upgrades matter a lot, too. Keep in mind buyers nowadays are attracted to modern aesthetics with luxurious must-have features (think stone countertops, white cabinets, open concept rooms, double sinks, rainfall showerheads, a theatre room, etc.). This trend has become even more popular during the COVID-19 pandemic.
“People couldn’t go anywhere for nearly two years, so they brought luxury to their homes. This same luxury is what they expect to see when they’re buying property,” added Khan.
Flipping a home is no small feat, but it can become a lot harder when you pick a property not primed to sell. To make sure you’re finding a good home to flip, be sure to seek out expert opinions, including those of a REALTOR®, before purchasing!
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