Calgary Real Estate Investments – Home Flipping Prep-Tips

August 11, 2014
By Cody Battershill

5 Preparation Tips for Calgary Real Estate Investors Looking to Flip a Home

One common investment strategy among real estate investors is to buy a property worth less than market value then perform renovations to increase its overall worth.

Also referred to as “flipping”, here are some key aspects that any real estate investor in Calgary looking to flip a property should consider:

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1 – Be prepared to work

First thing you should know about flipping a home is that there is lots of work involved.

Just like in any real estate transaction as a buyer, seller or investor (in this case), there are several factors that need to be carefully examined in order to be as successful as possible.

This includes regular steps with purchasing real estate, such as:

Mortgage approval

Hiring a real estate agent

Lawyer, registration and other home purchasing fees

Document reviews

Government taxes

As well as several more additional steps that could include:

Hiring a contractor

Structural improvements

Entire interior redesign

New kitchen, flooring, appliances, windows and finishings

Fresh paint job and updated landscaping

Cleaning

One thing to keep in mind is that you can lighten your work load by hiring an experienced real estate agent and contractor (if applicable) who will take care of many of the details for you.

Learn more at Calgary Real Estate Investments – Working With Cody today.

2 – Determine your budget

As with any real estate investment, it’s important to determine what you can afford.

A general rule with home flipping is to make an educated guess as to how much it will cost and then add 20 percent of that total on top.

This way if you do end up over estimating at least it will feel like you’ve saved some cash instead of having to pay unexpected bills.

3 – Don’t cut corners

The whole goal of a real estate investment is to make some money, so why not cut a few corners here and there and save some cash?

Well, it really becomes important that as an investor you thoroughly investigate what needs to be done to the home to maximize your overall profit and not cut any corners in the process.

For example, a brand new kitchen and flooring is standard for most flips, but if there was black mould found on the walls of the home then there is a more serious issue that needs to be handled before any buyer will even think of purchasing the property no matter how spectacular the kitchen or new floors are. The same goes for pest problems.

Some people might try to slip by and somehow cover up the mould or not bother to get rid of those pesky critters. Keep in mind though that it’s inevitable a third-party home inspector will find these and lots of time and money to be wasted.

4 – Don’t be too frugal

If you’ve purchased real estate before, you probably scanned the property from top to bottom and made sure that the carpet, baseboards, doors, windows, appliances and everything else were just the way they should be.

Why? Because buyers are some of the toughest customers out there and they no doubt should be as buying a home is likely one of the largest and most important purchases they will ever make.

So, don't waste any time and do the job right he first time. It goes without saying that almost every home renovation which is skimped out on will haunt you down the road. This could result in…

Reduction in the asking price

Spending more time on the market (and possibly more marketing fees)

Deterring a committed buyer all together once they find that skimped detail

…all things any real estate investor wants to avoid. If you’re doing the renovations yourself, do it right and take your time. If a contractor has his own set of guys then make sure they are!

5 – Don’t go overboard

If you’re planning flipping a home in Calgary, it is crucial to not go too overboard on expenses in relation to the area and original shape of the home.

Area

Just because you absolutely love an area doesn’t always mean that everyone else will too.

That also goes to say that if you have spent $250,000 on renovating a home with an original market value of around $450,000, it is very unlikely that a potential buyer will see that added value you’ve put in and make an offer of $700,000 for it.

On the other hand, a high-end renovation done inside of a luxury home in an upscale neighbourhood may be appreciated more by a potential buyer and add considerable value to the property.

If you’re not too sure about what affect a new renovation will have, book an appointment with a home appraiser or talk to an experienced real estate agent and they will be happy to help.

Structure

An older home with poor structural integrity may have to be redone before it’s up to par with modern-day expectations. Having to rebuild the entire structure of a house is a lot of work and will cost a pretty penny, reducing your end profit.

The best way to make sure the structure is sound is to book an appointment with a home inspector as they will tell you what you need to know about the property.

Stay tuned for more real estate investment tips below!

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Questions about Calgary Real Estate Investments?

As a top-producing REMAX Real Estate Agent in Canada (2013), I will help you find a property that will fit your investment goals to the fullest. Call me anytime at 403-370-4180 or message me below, I am looking forward to your call!