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How to Flip a House in Calgary: Determining Your Flip Style

Posted by Rachel R. Vanderveen on Thursday, January 17th, 2013 at 5:53pm.

flipthishouse_120Welcome back to our fourth installment of the series I’ve been working on which explores how to do a Calgary real estate flip. As I see it there are three basic kinds of flips which work in this market. Perhaps there are a few different variations of these types, but these are the three main ones. Read through the basic flip stratagies and determine which one works best for your budget, time and availability, and skill set

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Buy Low, Gut, Sell High

Often times real estate does not sell because it is out of touch with its competition. For example, you may have a lonely 1200 square foot house in a high-end neighbourhood of 1900 square foot houses, and buyers just aren’t interested in the tiny house. Perhaps you have a two-bedroom house in a three-bedroom neighbourhood. Maybe you’ve found the last house in the neighbourhood with totally original wiring. Whatever the case may be, if you can identify what it is that is making the home a stinky fish on the Calgary Real Estate market, you’re already head and shoulders above most flippers. Building an addition, moving walls, or creating useful space where there once was none, is the best way to make big bucks in this game. This type of flipping is for the experienced high-rolling flippers, and I usually strongly encourage brand new Calgary flippers not to start in this arena. It’s something that you grow towards, and learn your way into. Having some sort of construction or experience is definitely a plus in this type of flipping, but if you trust a few trades with your life, you can definitely find success in this realm.

Buy Low, Apply Lipstick, Sell High

This is wonderful place for first time flippers to get their feet wet and learn about the Calgary Real Estate market. This type of flipping is cosmetic fixes only and it involves a huge amount of creativity because the budget has to stay very, very low. In most cases, rather than ripping out old household items like cabinets and drywall, you need to gently rehab them, and make them appear new. There is certainly money to be had in this field, and it can be very much worth your while. If this is the strategy you start with, construction knowledge is always a plus, but an eye for design will quickly shoot you into the big leagues. You’ll need to work extremely closely with your agent on a flip like this to make sure you spend your budget on fixes that will actually net you money on a resell. A common pitfall for first-time flippers in this realm is spending money on things they would personally like in a home, but for which the average buyer will not pay extra for.

Buy Low, Move In, Renovate, Sell High

This is another great arena for first time flippers. Not only does it have the advantage of throwing out the clock (unlike the other two), in many cases you will not have to pay tax for your profit if it’s your principal residence!* This is a great option for people who like to tinker, but when all is said and done, they know they just don’t have the time to commit to a full scale flip. Another major plus is that it can allow you time to grow your equity if market prices increase over the time you own the property. That being said, there is also an inverse risk of losing money should market prices decrease while you live in the property. Many flippers have mitigated that risk by having a plan to rent out the property should such a situation occur.

Now that you have your financing in the bag, and you’ve taken stock of what it takes to be a flipper, start to think about what kind of flip you can truly, logistically handle. You will find that most flips fall largely into one of these three categories. If you’re not sure what you are able to do, give me a ring and I’ll be happy to help you sort out what might be possible.

 

 

*Always consult with a qualified accountant before making any tax-planning decisions. There are some cases where you will have to pay tax on a flipped home that you have lived in. Be sure to run any and all profits made in a year by your accountant to ensure compliance with current CRA guidelines.

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.


Rachel Vanderveen

The Vanderveen Team
Maxwell South Star Realty
Phone: 403.253.5678 Fax: 403.592.6736
Email: Info@VanderveenTeam.com

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