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House Flipping - How to Get Started.

Updated: Sep 28, 2023


House flipping: a person flipping a house to a couple

House flipping has become an increasingly popular investment strategy in the real estate industry, offering opportunities for substantial profits to its investors.


This article will help the readers understand house flipping and will provide a step-by-step guide on how to get started with house flipping.


House flipping refers to purchasing a property, usually, a distressed or undervalued one, intending to renovate and resell it for a profit.


The goal is to add value to the property through strategic improvements and upgrades before returning it to the market.


The growing population, limited housing supply, and rising property prices have created opportunities for profitable flips across various provinces and cities.


House flipping Canada

As of 2023, the Canadian house-flipping market has been experiencing growth.


Canadian home sales rose 5.1% in May from April and were up 1.4% year-over-year, the first increase on an annual basis since June 2021, the Canadian Real Estate Association said.


Recently, NerdWallet conducted a study and found that Over 2 in 5 (43%), or almost 16 million, Canadians plan to purchase a home in the next five years. And Thirty-four percent of Canadians have said buying a home is a priority because it’s a good investment.


The demand for renovated homes is high, attracting local and foreign investors looking to capitalize on the current market conditions.


Canada has witnessed increased house-flipping activity, with more investors exploring this profitable market.


However, navigating this competitive landscape requires a sound understanding of the process and careful planning.



What does flipping a house mean?

House flipping involves a series of steps, starting with buying a property at a lower price, enhancing its value through renovations, and selling it at a higher price.


Successful house flippers are skilled at identifying properties with untapped potential and strategically improving them to appeal to potential buyers.



The Benefits and Risks of House Flipping

House flipping offers several advantages, such as the potential for substantial returns on investment and the ability to create wealth relatively quickly.


However, it also comes with risks like financial losses, unexpected expenses, and the potential for extended holding periods.



How to start flipping houses?

Before diving into the house-flipping business, aspiring flippers must lay the groundwork for it. Here are some essential actions one needs to take for starting a house flipping business.


Researching and Identifying the Right Real Estate Market

Choosing the right market is essential for a successful house flipping venture. In-depth research on local housing trends, demand, and economic indicators will help identify areas with high potential for profit.


Finding Profitable Properties

The key to a successful flip lies in identifying distressed or undervalued properties with significant potential for improvement. Networking with real estate agents, attending auctions, and exploring off-market listings can uncover hidden gems.


Analyzing Potential Flips - Key Metrics and Considerations

Flippers must consider the purchase price, renovation costs, holding expenses, and estimated resale value. Conducting a detailed financial analysis will help determine the potential profit margins and mitigate risks.


Setting Your House Flipping Goals

Establishing clear and realistic goals is essential. Determine the number of flips you aim to complete, the expected profit margins, and the timeline for achieving these targets.


Building a House Flipping Business Plan

A well-crafted business plan will serve as a roadmap. Outline your budget, renovation strategies, marketing approach, and exit plan.


Assembling Your House Flipping Team

Flipping a house requires a team of professionals, including real estate agents, contractors, inspectors, and accountants, to ensure a smooth and successful operation.


Getting Started with House Flipping

With a comprehensive understanding of the market and potential flips, it's time to get started on the house flipping journey.



What are the steps to flipping a house?

The process of flipping a house can be broken down into several steps:


House Acquisition

Acquiring the right property is the foundation of a successful flip. Flippers must negotiate a favorable purchase price and conduct due diligence to avoid pitfalls.


Renovations and Repairs - Where to Invest

Strategically planning renovations and repairs is crucial to maximizing the property's value. Invest in upgrades that will yield the highest return on investment.


Working with Contractors and Managing the Timeline

Efficient project management and coordination with contractors are vital to ensure renovations stay on track and within budget.


Navigating Permits and Regulations

Complying with local building codes and obtaining the necessary permits is crucial to avoid delays and fines during renovation.


For guidance and information regarding the renovation and construction, one can refer to the following:


The National Building Code of Canada (NBCC) The NBCC is a set of national standards for construction and renovation work. While it is not mandatory to comply with the NBCC, it is often a good idea to do so, as it can help to ensure that your renovation work is safe and meets minimum quality standards.


The Canadian Real Estate Association (CREA) provides information and resources on real estate investing, including house flipping.


The Canadian Home Builders' Association (CHBA) offers training and certification programs for home renovators, which can be helpful for house flippers.


Marketing and Selling Your Flipped House

Effectively marketing the renovated property is key to attracting potential buyers and securing a profitable sale. Some effective house flipping marketing strategies that the investor can use:


  • Strategically pricing the property will determine its market appeal and potential for a quick sale.

  • Having a USP for the house helps it stand out from the competition.


A unique selling proposition (USP) is a statement that describes what makes your property unique and desirable to buyers. It is a key part of your marketing strategy and can help you stand out from the competition.


To create a USP, start by identifying your target market, think about what makes the property unique, and keep the USP short, sweet, and specific.


A good crafted USP should sound like this:


"This spacious ranch home has been completely remodeled with modern finishes and appliances."


"This charming cottage is located on a quiet cul-de-sac, just minutes from downtown."


  • Leverage various marketing channels, including online listing sites like Realtor.ca, centris.ca, zolo.ca, rew.ca, etc.

  • One can also use social media and open houses to create buzz around the property.

  • Effective negotiation skills can influence the final sale price and maximize the profitability of the flip.


Closing the Deal and Collecting Your Profits

Successfully closing the sale marks the culmination of the house-flipping journey. Careful planning ensures a smooth and profitable transaction.



How Long Does It Take to Flip a House?

The average time it takes to flip a house is between 5 months and one year.


The extent of renovations required, the efficiency of the renovation process, and the state of the real estate market such factors contribute to the overall timeframe.


Here is a general timeline for flipping a house, starting with acquisition, renovation, marketing, and sale.


House Acquisition (2 to 6 weeks)

  • Research and Searching: This involves looking for potential properties to flip. It might include browsing listings, attending real estate auctions, or networking with other investors.

  • Property Visits and Inspections: After identifying potential properties, you'll need to visit them, assess their condition, and determine if they're suitable for flipping.

  • Negotiations: Once you find a property you're interested in, negotiations with the seller take place. This is followed by conducting due diligence, which involves inspecting the property's title, legal issues, and potential for profit.


Renovations and Repairs (2 to 6 months):

  • Planning and Design: Developing a renovation plan, including deciding which repairs and upgrades are necessary to increase the property's value.

  • Obtaining Permits: If major renovations are needed, you may need to secure the necessary permits from local authorities.

  • Renovation Work: This includes actual repairs, upgrades, and renovations to the property. It involves coordinating contractors, overseeing the work, and ensuring everything is done to the desired standard.

  • Quality Control: Regularly check the progress of renovations and ensure that the work is being carried out according to the plan.

  • Unforeseen Delays: Renovations can sometimes encounter unexpected issues, like weather delays, supply chain disruptions, or unexpected structural problems, which can extend the timeline.


Marketing and Selling Your Flipped House (1 to 3 months):

  • Staging and Photography: Preparing the property for listing by staging it with furniture and decor. Professional photographs are taken for marketing materials.

  • Listing and Marketing: Creating appealing listings on various real estate platforms, showcasing the property's features and renovations.

  • Open Houses and Showings: Hosting open houses and private showings for potential buyers to view the property.

  • Negotiations and Offers: Interacting with potential buyers, considering offers, and negotiating the final sale price.


Closing the Deal (4 to 6 weeks):

  • Buyer's Due Diligence: Allowing the buyer to conduct due diligence might involve inspections and reviewing documents.

  • Appraisal and Financing: The buyer's lender orders an appraisal to ensure the property's value aligns with the loan amount. The buyer finalizes their financing.

  • Title Search and Insurance: Ensuring there are no title issues and obtaining title insurance to protect against any unforeseen ownership disputes.

  • Legal Paperwork: Preparing and signing all necessary legal documents for the property transfer.


Collecting Your Profits (Immediate):

  • Once the deal is closed and all necessary paperwork is signed and processed, you'll receive the proceeds from the sale, which represents your profit from the flip.


These time estimates are general guidelines and can vary based on project specifics, market conditions, and your team's efficiency. It's important to thoroughly research each step and work closely with professionals, such as real estate agents, contractors, and legal experts, to ensure a successful and timely house-flipping process.


Conclusion

House flipping can be profitable and rewarding for those willing to put in the effort and adopt a strategic approach.


As the Canadian market continues to offer opportunities, aspiring house flippers can capitalize on the growing demand for renovated properties.


So, in a nutshell, house flipping process looks like this:


  • Researching the market and identifying profitable properties.

  • Setting clear and realistic goals, building a business plan, and assembling a team.

  • Accurately assessing the property's value and negotiating a favorable purchase price.

  • Comply with local building codes and obtain the necessary permits.

  • Renovating the property.

  • Market the property effectively and set the right price.

  • Negotiate effectively and close the deal.

At Collard Properties, we understand the complexities of the real estate market and recognize that the investment landscape can be challenging. That is why we support and guide investors throughout their investment journey.


By partnering with Collard Properties and investing in the Real Estate Mutual Fund Trust, investors can benefit from rental investment without managing the property. Furthermore, investors also gain access to a team of seasoned professionals with a proven real estate investment and management track record.


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