I’m returning to my fix and flip series. (previous blogs on the topic can be found here, here, here, here and here) I have a few clients coming through the pipes looking for exactly this type of product, and I wanted to flesh out a bit more of what to look for when you’re out to do a fix and flip in Calgary.
Yah, I know. I hate to be so cliché, but it’s true. A REALTOR is a resource that is free to you when you are buying. We know the ropes, and we know what we’re looking for in a home to flip in Calgary. We can translate your hopes, dreams, and desires into a physical reality. The bottom line is that you’re going to get deluged in information on the internet, and a lot of it is just cr@p. Your agent sorts through all of the information and presents to you the analyzed knowledge you need to make an informed choice.
Location, Location, Location
No surprise here. You know as well as I that the location of any property matters, and your fix and flip in Calgary is no exception. (For more information on what constitutes a bad location in Calgary, see my blog here). Your one goal in a fix and flip is to turn a profit, and everything you can do to meet that goal is something you want to pursue. So let’s say you add an upgrade in your fixer-upper for $10. That particular upgrade on a normal house on a normal lot would yield you a $13 return, but in a bad location, you’d be lucky to get $11 and in a good location you’d probably get $15. Make sense? Always buy a great location.
The Straggler on the Block
You always want to buy the straggler on the block. Buy the house that is a 2 bedroom when everyone else has 3. Buy the house that doesn’t have a master ensuite, when everyone else does. Take your little straggler, and renovate it to compete with the big guys: give it a 3rd bedroom, rearrange and make an ensuite. Take a home that is drab and blocky, and bust out walls to make it bright and open concept.
You want to buy a home that hasn’t been renovated yet. You don’t want a house where someone re-did the kitchen, but everything else is original. The reason is that you’re going to have to pay for their kitchen and that’s the work you need to do. You also have to accept their standard of workmanship and the fact that the whole house doesn’t flow. When you come in and do your job, every room will fit together in harmony. There won’t be any half-done jobs or piece-y workmanship. Remember that a gut job is a gut job. A reno is a reno. Whether it was finished in 1970 or prior, 1980, or 1990, it needs to be ripped up and redone and the cost is often the same. (Unless we’re looking at redoing electrical or plumbing).
Now this isn’t make or break, but I love to find a house where the invisibles have already been done for you but the interior has not. Invisibles include: new windows, hot water tank, furnace, roof, etc. Although these do yield a return, for small budget (or lipstick flippers ), having these large projects done in advance can be a huge advantage on the flip. However, if you’re the gut-and-flip type, the invisibles are great to do on your own, especially if you have contacts to get a great rate.
Do not buy a house that requires a huge fix before it’s even marketable, unless you have specific experience and knowledge in that area. A good example of that would be a former grow op. This may seem like a great way to make money, but you have no idea what goes into fixing a grow op to a point where it is actually saleable. Don’t do it.
Here’s a curveball: They are not always a good deal. Just because something has an orange sticker on it, doesn’t mean the price beneath the sticker it isn’t the exact same as the price on the sticker. Don’t assume that because you’re looking at a bank foreclosure, you’re getting some kind of discount. In most cases, you are not. (See my blog on Hidden Costs in Calgary Foreclosures).
There are so many different things to consider in a fix and flip. Your best bet is to ring your agent, state your intentions and go from there. Good luck!
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