The Toronto real estate market’s booming with new opportunities left and right. Aside from home ownership, it’s also an ever-growing playground for real estate investors. Many entrepreneurs turn to flipping properties as their primary route for investing in real estate. House flipping involves buying, renovating and then ultimately, selling the property.  

There are 2 basic strategies for flipping houses. The first’s when you purchase a property that’s in need of renovation with the intention of selling it at a higher price for profit. The second’s when you plan to buy a home in areas where prices are volatile. In this case, you won’t have to undergo a house renovation, but instead, wait for prices to rise and sell the property for more than you paid for it. 

5 Simple Steps to Flipping Houses

      1. Determining your goals and budget

Before embarking on your house flipping journey, you need to decide which method of flipping you want to go with. Once decided, you’ll want to create a budget and select a location. Where do I want to flip? How much am I willing to spend for the property? What type of home am I looking to buy? How much money do I need for repairs and renovations? Is this for your retirement fund or for your family?  

Take your time in assessing your individual situation and answering these questions to help paint a clear picture of what you want. The more specific you’re with what you want, the easier it’ll be for you to act on it.  

      2. Assessing the risk factors

When you want to plan on house flipping, you should consider all of the risk factors, especially with the current market conditions. For instance, the real estate market may fall just as you decide to sell or prices of supplies can dramatically increase in times of scarcity. Conversely, you may also discover that more repairs are needed than originally anticipated. Knowing the risks can get you to plan ahead and help to prevent undesired outcomes.

Consult with a realtor who knows the in’s and out’s in your local housing market and a mortgage broker who can help you with managing your finances. 

      3. Financing your flip

The main goal here’s to make profit, as such, exercise caution when preparing your finances. Have your cash in hand or a secured source of funding to cover loan payments when flipping properties. Ensuring that you’re financially ready for buying the property, upgrading it and finally reselling it.

If you’re looking for ways to finance the house flip, make sure to explore different home loan programs and avail one that best suits your financial capacity and goals. Consult a mortgage broker to provide you with options and to help you get the best and most cost-efficient deals.

      4. Learning the market where you want to flip

While flipping houses can be exciting, doing the research prior to purchasing a property will help you with learning the market. You might have to scour the local neighbourhoods and dig deep to find a flip that meets your parameters. Failing to do so can lead to many predicaments, such as paying too much for a property. It’s important to remember to buy low and sell high as you’ll want to cover your expenses to make a profit. 

Learning the market can also help you to identify what potential buyers are looking for. The best renovations are ones that add value to the property and help to ensure you yield a better return on your investment. Working with a great realtor can help you avoid potential problems while identifying possible flips within your search criteria.

      5. Purchasing the property and beginning the flip

Before closing the deal, consider bringing in a home inspector and a contractor. Although not required, they’ll be able to point out potential issues and significant repairs that might otherwise go unnoticed. A contractor can help with giving an idea of how much repairs and renovations may cost. Identifying major potential problems in a property before you invest into it can save you from investing what can seem like a bottomless money pit.

Being Savvy with Your Flip

At first glance, flipping houses may appear like an easy investment but it’s more than just buying and reselling a house. Aside from doing the necessary repairs and renovations, you may want to look into some optional features that can improve the quality of life. Getting the input from the professionals – realtors, stagers, interior designers, architects, home inspectors and contractors can give you some simple ideas that can help attract more potential buyers that may be willing to offer a higher price. 

Resist the urge to sell quickly to recoup your investment and pace your timing and choice of property. Keep in mind that the cost of improvements won’t always be equal to the value added to the property. Some features may cost a lot and add very little to the property’s value, whereas some improvements may cost very little, relative to the value that’s added to the property. If you’re savvy with your flip, you can stand to make a substantial profit.

Daisy Raouph can help to advise with the financing for your next house flip. Based just outside the Greater Toronto Area, she’s a mortgage broker and financial security advisor equipped with over 30 years of experience in mortgage and financial services. Consult Daisy today to discuss your options.