One of the first things you’re going to need is a budget. You need less cash to flip a property than you probably think, especially when you consider that it is possible to partner up with an investor. When you flip a house, you want your expenses (the cost of the house, mortgage payments [if any], taxes [if any], repairs, labour, and materials) to be less than 80% of the total sale price of the home when it hits the market as your new pretty confection. Which means you’ll need a solid market analysis from a real estate agent on both the current value of the home, and the expected sale price once renos are complete. You should have an idea of your total budget of the homes you want to look at or buy, before you approach your mortgage broker asking for a loan.
Coming up with the right financing strategy can be a trick. But there is always more than one way to do just about anything. Got the itch to flip but the cash just isn’t there? Here are some options to consider.
- Partner with someone who does have the money to invest in your vision
- Look at getting a home equity line of credit (HELOC) on your primary residence to fund your venture.
- Mom and dad have always thought you’re the best at everything you do. Ask them to put their money where their mouth is!
- Flip the house that you’re living in now. (Just make sure it has the basic qualities of a great flip property).
- Look for a private investor. Expect to pay higher rates with tighter terms than your average bank loan.
Keep track of what is happening in your finances. The better you look on paper, the more you’ll be able to access loans with lower interest rates, and better terms. The best place to start is always with a mortgage broker who can assess your financial health in short order. For more information on your financial health fill out this short form here to be contacted with fast, free mortgage and financing advice.
Make sure you read our entire series on How to Flip a House in Calgary. Let me know if you have questions - I'd love to know how your "flip" turned out.
The Vanderveen Team
Maxwell South Star Realty
Phone: 403.253.5678 Fax: 403.592.6736