The writer is a BC mortgage broker with a keen interest in all things real estate.
In investment circles, the secret to success is cliche – buy low, sell high. This same principle applies to flipping houses. To succeed, you buy a house 25 to 50 percent below market value, repair and renovate the property to make it a more attractive purchase, and then turn around and sell it at market value.
That three-step process – buy, fix, and sell – certainly sounds easy enough, but each step carries with it a host of unique challenges, as I point out in the following sections.
To buy low, you have to be in a position to buy quickly. The trick is to have your financial ducks in a row before you go house hunting. Without a strong financial position you will find yourself making decisions that will cost you money.
Homeowners don’t exactly line up around the block waiting to sell their homes for less than they’re worth. As a house flipper, your job is to hunt for the homes in your area that are don’t wanners, as in “the owners don’t want her.” These orphan homes usually appear bedraggled. The yard looks like a weedy wasteland, the gutters are hanging off like a pair of old false eyelashes, the paint’s peeling, and the interior is completely trashed. These properties are often referred to as distressed, and their appearance indicates that the owner is distressed, as well. The home has become an albatross around the owner’s neck.
When the homeowners need to shed the burden of home ownership, they’re more likely to work out a deal with a serious investor. Subsequent posts will detail several successful techniques for scoping out distressed properties.