For a moment, it seemed like everyone was flipping houses for a profit. While the idea of flipping houses can be tempting, there is a lot more to it than “Find It, Buy It, Fix It, Flip It”.
When it comes to buying a home to flip, not any home will do. You still need to consider all the same things you would consider when buying a ready home. The location is going to be key. If you can find a home that needs some TLC but is still near to amenities, and in a good neighbourhood, then you’re off to a good start!
You also need to consider who is buying in the neighbourhood. Most people would love to have marble countertops and a vintage clawfoot bathtub, but not every neighbourhood fits the bill for those amenities. Adding high value and high-cost amenities to your home may price you out of the market and it may end up cutting into your profit.
Unless you are a professional contractor, you’re going to need to find one. Someone with experience, and a good reputation. Large scale renovations can be challenging, so you’ll want someone on your side who is experienced and knows how to handle it.
The two things that we be most challenging will be your timing and your budget. On time and below budget are ideal, but not always achievable. The longer a project takes, the higher your cost, and the more it eats into your budget. The higher your budget, the higher your asking price will need to be in order to make a profit. Your asking price does have a ceiling though, so it is critical to plan our your timing and budget beforehand to ensure your investment pays off.
So, where does Graysbrook come in? Check out this example.
| Property Location: | Urban Centre |
| Property Quality: | Average |
| Purchase Price: | $200,000 |
| Graysbrook Loan: | $140,000 for the purchase (meaning the client would need $60K down) |
| Projected Value After Renovations: | $300,000 |
| Cost of Renovation: | $60,000 (Graysbrook will release draws as renovations are completed) |
| Estimated Cost of Capital: | $10,000 |
| Profit: | $30,000 |
