The Simple Guide to Flipping Houses in Alberta
Flipping houses means buying a property, transforming it, and then reselling it. The goal is to find a house that’s being sold for a cheaper price than usual and renovate it so you can sell it for more profit.
House flipping might be challenging, especially for beginners. But don’t worry! Here’s a guide on the basic things you need to know about the business. We’ll go over the process of flipping houses and give you tips on how to do it right.
Header Image source: Pixabay
Choosing the Right Realtor for House Flipping
Before anything else, you have to find a good realtor that you can trust. They can help you find the best deals in the market. They can also help you with your budget for flipping houses.
A good realtor is someone who has enough knowledge of the neighbourhood you’re planning to buy a house in. They should be aware of the average market prices and the projected growth of the properties in that neighbourhood. This will help increase your chances of success in house flipping.
You would also want someone who already has a few years of experience in real estate. Agents with enough experience will be able to find better deals for you as they know more about the ins and outs of real estate.
Lastly, it is important to find a realtor that would be able to assist you in surveying the properties and putting up offers for them. Having a realtor to work alongside you will help you greatly, especially if you’re new to the house flipping industry.
How to Start Flipping Houses in 7 Steps
These tips will help give you a bigger chance of success in your first house flipping experience.
Finding a House to Flip
The first thing to do is to find the right house to flip. Do some research on the average market price of properties for sale in the neighbourhood. This will guide you in choosing the house that’s perfect for flipping.
A lot of things can be the reason for selling a house at a cheaper price than average. They can be anything from fixer-uppers, foreclosed, or auctioned properties. Some sellers also offer their house for a lower price because of the urgency in making a sale.
These investment properties in Alberta will get you off to a great start in flipping houses.
Setting a Budget and Securing It
Setting a budget is essential in this business. It not only helps you get a grasp of how much you’re willing to spend, but it also prevents you from investing in properties that wouldn’t give you much return.
For a $300,000 flipped house, you shouldn’t pay more than $180,000 for the house you’ll be getting. We’ll get to this in a second.
Once you’ve gotten a grasp of your budget, it’s time to secure it. Whether it’s from your own money or loans from a bank, make sure you keep it safe.
Buying a house may be tricky for the beginners, check out our home buyer’s guide to make it more simple.
Selecting Your Team
Image source: Unsplash
House flipping would be much easier if you have a team to work with you. This includes contractors, lenders, insurance agents, and realtors. These are the people who will help you in different aspects of the house flipping process.
Contractors and realtors will help you assess the condition of the house and tell you about the necessary repairs. They would also get you in touch with people who can do the renovations for the house.
Lenders, insurance agents, and accountants will help you take care of the financial aspects of buying a house.
Having a team of people you can trust will be of great help as you start house flipping. They will be able to take some of the burdens off your shoulders and make your business easier.
Planning the Redesign
Once you’ve decided on a house to touch up, it’s time to plan for its redesign. Planning is key in this industry. You should have a clear plan on what you need to improve in the house to increase its market value.
Consult with your team to find the optimal renovations and repairs you can do with the house. It would also be good to have an estimate of the total expenses so that you can prepare for it before the renovations start.
If you can do some renovations by yourself, it could also help in cutting back on your expenses.
Remember to only make changes that would be necessary. While it may be a good idea to add a swimming pool in the backyard, it might not be practical. Your profit is still your main goal in house flipping.
Monitoring the Renovations
It’s good to visit the house from time to time, even while the renovations are ongoing. Besides being involved in the whole process of house flipping, monitoring the renovations are also a big help. In this way, you can make sure that the job is being done properly.
It would also be easier to troubleshoot problems if you’re on-site. You can decide on things immediately, especially if unexpected things happen while improving the house.
Staging the Home
After the repairs and renovations are done, the next thing to do is to stage the house. Get in touch with your realtor to professionally stage the house and get it ready for sale. Here are some home staging tips to take note of.
There are also other ways to improve the chances of selling your home. Make sure to check these out so that you can sell your flipped house faster and for more profit.
Putting Your Flipped House in the Market
The last step in house flipping is to put the property on the market. Have your realtor assist you in doing this. They should know where to place your listing so that it can reach a wide variety of potential buyers.
The key to maximizing your profit in a flipped house is to sell it as soon as possible. The more it stays on the market, the lesser your profit will be. Read our home seller’s guide to learn more about the house selling process.
Cost of Flipping Houses
In learning about house flipping, you will have to know about the After Repair Value (ARV) of a house. This refers to the total value of the house once it has been fully renovated.
To get an idea of how much you should pay for a house, you have to stick to the 70% rule. Get 70% of the ARV of a house. Then, subtract the estimated repair costs from it.
Take a look at this example.
Ideally, you should only pay a maximum of $180,000 for that property. If it exceeds that, you might want to consider looking for another one.
Although the 70% rule isn’t always accurate, it’s a good starting point in setting your budget. You might also want to add a 20% buffer to accommodate unexpected expenses. It’s better to overestimate your budget than to run out of money later on and put your efforts to waste.
Flipping Houses in Alberta
Flipping houses has its pros and cons. It is a good stepping stone to real estate. It could also be a source of profit. However, keep in mind that house flipping doesn’t always guarantee profit. In some cases, it might even cause you some losses.
The best thing to do is to bring in some professionals to help you throughout the whole process. Establish a team that you can trust in this business.
Again, here are the steps in house flipping to help you improve your chances of success:
- Find the right property to flip. Watch out for homes that are being sold below the average market price.
- Compute your budget, but account for unexpected expenses along the way. Make sure to secure your budget even before you begin with the whole house flipping process.
- Find a team of professionals that you can trust. You’ll be working alongside these people, so it’s important to choose them carefully.
- Plan the redesign meticulously. Make sure to focus on the necessary repairs. Avoid impractical renovations.
- Keep a close eye on the whole renovation process. Check if the job is being done properly.
- Stage the home to increase your chances of selling it. You might want to bring in professional help to make sure you’re doing it right.
- Put the house on the market. Consult with your realtor to make sure your listing has a wide reach for potential buyers.