I bought my home in early 2020. It has appreciated since then and I would like to sell. I’m not sure if this is a good time, where I should go, or what to buy next, but I want to make some money in this crazy real estate market. Eventually I would like to make a career of flipping houses with my contractor husband. Any advice? – FLIPPING OUT
DEAR FLIPPING: Thanks for your question. There’s a lot to unpack here, but I’ll try to shine a little light on things.
First, a hard real estate truth: flipping houses is a risky venture for most people. It looks easy on television, but what an HGTV host shows you in 42 minutes may have taken many months to complete, even with a professional staff and a generous production budget.
Trying to replicate “as seen on TV” results while living in the house is challenging. On top of that, you always need to think about where you’ll go next. Opportunities exist in every market and there’s never a bad time to take a profit, but if you sell your primary residence without buying another property, you could squander any market gains you’ve made.
Finding the right house
With that in mind, what should you look for in a flip? I’ve seen people have the most success with properties that need a lot of work, but are in a great neighbourhood. An example might be a home that’s been lived in by the same owner for 30 or 40 years and has had functional updates, but no cosmetic improvements.
Creating a plan
To flip houses as a career, you’ll need a well-planned business model. Financial backing is one part of the equation, but finding the right talent is just as important. Being married to a contractor is a definite advantage. Still, there’s a good chance you’ll need to involve other trades.
Our current housing climate makes it hard to establish clear and realistic timelines for hiring tradespeople. Back in the building boom of late 2016 and early 2017, many builders had sold out of new inventory a year in advance. The backlog of jobs made it virtually impossible to secure talent. Today we’re experiencing a similar skills shortage, which has been made worse by COVID-19 supply chain delays affecting everything from flooring to appliances.
If you find the perfect home to flip but have no supplies and nobody to do the work, your project may sit idle — which will eat up your profits. Delays are inconvenient at the very least. If your property sits vacant, the insurance expenses can be astronomical.
These days, the Canada Revenue Agency (CRA) has house flippers on their radar more than ever before. If you’re planning on making a career out of flipping houses, you’ll need to register your venture as a business like any other. #AskDavid #Advice
David is a top-selling Broker in Kitchener-Waterloo Region. He works personally with you when selling or buying a home. Moving? Get it right. Ask David today! Call or text 519-577-1212.