Well ladies and gents, I had a long night and I am still trying to recover from a night out on the town. I have had an overwhelming demand to write about what's involved when flipping a Toronto home. Even though I had a long night partying, I don't drink, so I am cohesive enough to steer you in the right direction. Being a Toronto Realtor for many years I have a large client base that buys Toronto homes for the sole purpose of flipping plus I too have had much success in this department, so you’re in good hands to use this article as a starting guide.
Everyone seems to be watching the slew of television series about home flipping and they all automatically believe "hey of he can do it then so can I, it can't be that tough!" to be honest, home flipping in Toronto is not the same as buying a house in most U.S markets as you watch on TV. There is a core difference between in how we do business here in Ontario versus how they do business south of the border. I don't want to get off topic but it all starts with our mortgage and construction regulations plus let’s not forget that in Ontario that a home that has been 90% renovated and then sold, the home is subject to H.S.T. to be paid by the buyer.
The first step in being successful at this type of business is to do your research starting with government obligations and tax penalties so that when the time comes to prospect a property, you will be able to do the math and assure yourself that the profit margins make sense when weighing in the risk factor before pulling the trigger. The next step is a logical one, knowing your strengths and weaknesses, and what I mean by this is if you’re a contractor then your strengths are dealing with the construction process, and on the flip side of it if you’re not a tradesman then maybe your strengths are organizing trades and research. It's important to know what your role will be once the project begins.
Another big aspect of home flipping is being able to identify the right property to purchase that will bring the greatest ROI (return on investment) an experienced home flipper might prospect a large project like buying a bungalow and adding a second storey to it, just like Gianluca the home flip guy I interviewed on camera below. A less experienced person will prospect homes that just need a simple facelift like renovating the kitchen and baths, that type of project may not bring back the highest ROI but it's a good way to get their feet wet. This how I suggest the less experienced individual should start, minimize your risk factor with the less intensive project and stick to cosmetic work and stay away from any type of structural work initially.
The essential items that a home flipper will look at are windows, furnace, a/c, electrical, plumbing and the roof. All these items will be heavily scrutinized from any prospective buyer as they are bare bones must on a home buyer criteria list. A smart home renovator won't take any short cuts with these items as they don't want to find themselves on the Mike Holmes show once they flip the property. Having all permits is a must in today's market as great buyer representatives will inquire and add the permit inspections to the offer at the time of sale.
Energy star is also a great way to approach a flip, with all the great government rebates to help with costs and it really makes the property even that more attractive to any buyer. For eg.. A brand new furnace will bring up to $800,00 back and $40.00 per window, these are just a few examples of how home renovators can take advantage of the governments generosity. The first step with building an energy star home is having a energy audit at a cost of $400.00 sounds a little steep but well worth the investment.
Finally- being able to market your newly renovated masterpiece is a job in itself, leave that part to the pros like the home stagger and your Toronto Realtor, but you can do your part by taking before and after pictures throughout the Reno and even maybe shoot video as it really does help in promoting the homes worth.