Smart House Flipping - Where Is The Money When Flipping A House in 2023?
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Think about house flipping? Here are some fundamentals that you should watch out for so that you're not monkeying around when you're buying your picker-upper stay tuned. I promise you it'll be worth it.
Article is transcribed from the video below.
Good day Toronto, welcome to another episode of prime properties TV. I'm so glad you could join us! if your risk tolerance is fairly hot and you understand the concepts of recourse loans from last week's episode. Then you don't want to miss today's episode where we going through where the money is when it comes to house flipping.
Now, there are multiple ways to do a flips and to get a good return. But today I'll be going over the basic single family house. This is your house where it's meant for one family to live. Which is a good way to start house flipping.
Generally, I like to classify our Renovations into three buckets. Okay, one lipstick renovation to lay out renovation three structural renovation.
House Flipping profits are in the Forced Appreciation
And remember as we go through all of these types of Renovations. Keep in mind. The money is in the forced appreciation. I repeat forced appreciation is how much perceived value your Renovations have minus the cost of it based on whatever buyer you are and make sure you also know your Market because this it’s a highly sought-after area like the Bay View Corridor,
then your standard of finishes is probably higher. So make sure you put that premium finish in it.
Three types of renovations
Now let's go through the three types of Renovations.
Lipstick Renovation
I was talking about it before the number one lipstick renovation. This is a term we use in industry for minor things that don't really change the functionality of the overall house too much but it makes it look better most current flips. I see on the market going for are trying to go for like a modern contemporary feel to the house and these changes could include but not limited to you know, a Fresh coat of paint.
I ain't changing a kitchen cabinets replacing the sink faucets new bathroom vanities refinishing the exterior of the house and changing the channels and stuff like appliances that aren't like stuck on built into the house and you'll notice a lot of these don't require like cutting into the wall. That is the definition of a lipstick renovation.
Now, these lifts will give you added value but generally in my opinion it's not enough money for the time and the process that you have to go through to get it done.
Layout Renovation
The second one is the layout renovation. This is a term that you can tell clearly from the name that you start moving walls around taking things down rewiring things in the house and they're some of them can be and not limited to changing out light fixtures, you know adding and pot lights to look really good taking down walls to open up more space building bathrooms building bedrooms adding in-law suite with this type of work. You'll be changing the functionality the house quite significantly by adding more bathrooms and bedrooms.
You're actually tapping into renovation work that many people don't touch. Layout Renovation is where the perceived value of your renovation starts increasing getting higher and higher and higher which means the money your netting after selling it gets higher and higher and higher.
Structural Renovations
Lastly, I want to talk to you about is structural Renovations.
This is even for intermediate flippers. Sometimes they don't even want to touch and some of these Renovations include but not limited to raising a sinking house. That's not fun. It's cracked foundation or rebuilding roofs. That would be sounds like a lot of work right most of the time you have to make so you are the structural Renovations that you're doing to a house. The house is practically uninhabitable.
The thought of structural repairs can ward off a lot of investors, but that is exactly why the big bucks can be made here with the structure Innovation by picking up something that nobody wants. Generally you can get it for a significant discount and you bring the property up to par or even higher than the market and you affect you create a lot of perceived value and a lot more dollars in your wallet.
Discover How To Flip A House With This Step By Step Guide
House Flipping Trends
Now that everyone kind of understands the three types of renovations. Are some growing Trends I'm seeing in the feel that home buyers are generally looking for that. They have increased perceived value which means that the higher return on these Renovations is there by adding things that make the property stand out from the buyers.
Buyers love Curb Appeal
Home buyers generally want something that's Turn Key so things that they do fall in love with are how it looks from the outside. This is what we call Curb Appeal, you know stuff like Landscaping bushes trees outdoor lights put an edge on the driveway. That's always nice. And have a nice door in a nice door knob.
Buyers love a kitchen they can Entertain in
You should consider opening up the kitchen, you know, not look crammed into the corner because people use the kitchen for entertaining now. So put an island there.
Add ample Storage
Lots of storage people have so much stuff now they always go to cut make Costco run so they want to be able to store their stuff. So think Ikea storage stuff and forth. This one is super important as well.
Add Lots of natural light.
If you have the opportunity to add larger Windows to let more light into the house, I almost say definitely do it. It's worth the money and some will not consider moving forward on a dark house.
Wrapping up our house flipping lesson
Don't forget. There's some closing costs that you've a lot of people often forget.
- Land transfer tax
- Don't forget you’re also carrying the mortgage and cost of renovations
- Mortgage set up fees ( if any )
- Legal fees
- Capital Gains
Thank you guys for watching if you guys would learn something or simply enjoyed watching the video make sure you subscribe to the private property to your channel down here or in the description below. And if you have any comments or any questions, make sure you leave them below or email me directly. My email is right here and remember make sure you guys share this your family and friends because like I always say an educated consumer is the best consumer. I'll see you next time Toronto.
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