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Old 10-22-2016, 12:00 PM   #1
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looking at buying fixer upper to flip or sell


hi ther I'm looking at buy a single floor home about 1000 sq feet fixer upper. Its bank repo 90 percent of the house has been gutted only a bathroom and bedroom are left. I have done small project in my past but nothing this big. I'm looking at either flip this or renting it out. Any body have advise? I'm in Ontario canada
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Old 10-22-2016, 01:15 PM   #2
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Re: looking at buying fixer upper to flip or sell


Are you planning to do this to earn a profit, or is this just something you want to do for the fun of it? Actually making a profit by flipping houses is a lot harder than the TV shows make it out to be. Especially perilous for a novice.
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Old 10-22-2016, 01:33 PM   #3
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Re: looking at buying fixer upper to flip or sell


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Originally Posted by rickyz View Post
Any body have advise?
Spend a lot of time and work the numbers in detail to know exactly how much you need to spend and how long it will take to rebuild the house.

Then double the dollars and double the time.

If the numbers still work, go for it.
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Old 10-22-2016, 01:39 PM   #4
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Re: looking at buying fixer upper to flip or sell


I believe in Ontario if you don't live in it for at least two years you must pay capital gains tax on profits so don't forget to figure that into you profit calculations.
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Old 10-22-2016, 01:40 PM   #5
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Re: looking at buying fixer upper to flip or sell


I'm looking at it as a hobby more than anything need something to do this winter. but I still want to make a little bit of profit.I'm not a total novice currently own three rental propertys, just have never done a full rebuild

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Old 10-22-2016, 01:42 PM   #6
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Re: looking at buying fixer upper to flip or sell


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Spend a lot of time and work the numbers in detail to know exactly how much you need to spend and how long it will take to rebuild the house.

Then double the dollars and double the time.

If the numbers still work, go for it.
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thanks that makes sense
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Old 10-22-2016, 01:45 PM   #7
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Re: looking at buying fixer upper to flip or sell


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I believe in Ontario if you don't live in it for at least two years you must pay capital gains tax on profits so don't forget to figure that into you profit calculations.
thanks I did not now that
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Old 10-22-2016, 03:05 PM   #8
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Re: looking at buying fixer upper to flip or sell


Do you finances allow for the fact that it may not sell, or be rented for a very long time? Meaning can you carry the weight without issue?

Are you planning on hiring out a lot of the work? Getting estimates for all ahead of time, IS a part of this.

Do you have reliable comparable values for the neighborhood? I do not mean Zillow and the like. Those can be way off the mark. Looking at other homes in the area that are currently for sale, in person, and using those "asking" prices can help if you don't have access to some inside the real estate market help.


I can tell you for certain, it never goes like planned, so the time always runs long, and the initial numbers go off the mark.

BUT. Even with the risk of losing your azz, it can be fun. As long as you're into self punishment that is....
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Old 10-22-2016, 03:44 PM   #9
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Re: looking at buying fixer upper to flip or sell


Able to pay cash, hard to get a loan on something of little value to the bank.
Do you have the time, tools, and know how?
Able to get it really cheap?
Have to hire subs for wiring, plumbing, sheetrock?
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Old 10-22-2016, 03:44 PM   #10
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Re: looking at buying fixer upper to flip or sell


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Do you finances allow for the fact that it may not sell, or be rented for a very long time? Meaning can you carry the weight without issue?

Are you planning on hiring out a lot of the work? Getting estimates for all ahead of time, IS a part of this.

Do you have reliable comparable values for the neighborhood? I do not mean Zillow and the like. Those can be way off the mark. Looking at other homes in the area that are currently for sale, in person, and using those "asking" prices can help if you don't have access to some inside the real estate market help.


I can tell you for certain, it never goes like planned, so the time always runs long, and the initial numbers go off the mark.

BUT. Even with the risk of losing your azz, it can be fun. As long as you're into self punishment that is....
yes prepared if it sits for a few years, it shouldn't but I am prepared
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Old 10-22-2016, 04:05 PM   #11
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Re: looking at buying fixer upper to flip or sell


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Able to pay cash, hard to get a loan on something of little value to the bank.
Do you have the time, tools, and know how?
Able to get it really cheap?
Have to hire subs for wiring, plumbing, sheetrock?
I'm paying for it cash getting it cheap. I have tools
most my family has built there own house so it may cost me few beers for advice but I don't plan on hiring out. I do have experience in repairs in all of the above
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Old 10-22-2016, 04:25 PM   #12
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Re: looking at buying fixer upper to flip or sell


Ricky....

Actually, you sound very prepared.... with a rental and general repair experience/background, cash, exit options of flip or rental, time available will allow you the luxury of shopping at good timing for bargains (both materials and sub labor).

I believe acquizition cost extreemly important (good pricing with I call a "lot of fat"... because there are always the unforeseens. You seem to know your market and confident you've got a good price.

Environmental concerns (mold/asbestos/meth house) can be very troubling, as those are both costly to do with specialist sub labor.

If flipping, you may want to go visit the open houses in the neighborhood to get a feel for the comparable properties as to design and level of finishes... you may be more geared to standard rental norms verse contemporary buyer markets.

In general, I like to build to the top end of the local market. I figure that strategy tends to give you a good name, and makes the home much quicker/easier to sell, and at the same profit margins as building to a lesser degree of finish. However, if keeping as a rental, you may not want to do so... depends on your local rental markets.

Go for it.... Good luck...
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Old 10-22-2016, 05:17 PM   #13
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Re: looking at buying fixer upper to flip or sell


A couple of additional issues:
1. In my area a home owner can do their own electrical and plumbing. But, if the property is being remodeled to be sold or rented that work must be done by licensed contractors. I have no idea as to what your location requires.
2. You will need contractor's insurance and the insurance company needs to approve of you doing the work over what may be a longer than normal time.
3. Often a repo is offered for sale to the open market or auctioned. In either case other contractors more experienced at selecting properties to flip are not buying at the price you are paying. What do they know that you didn't see?
4. Be sure you can get a clear title to the property as banks often sell "as is" and there can be other leans against the property. A quit claim deed only eliminates the banks claim to ownership.

Best,
Bud
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Old 10-22-2016, 09:53 PM   #14
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Re: looking at buying fixer upper to flip or sell


Quote:
Originally Posted by joed View Post
I believe in Ontario if you don't live in it for at least two years you must pay capital gains tax on profits so don't forget to figure that into you profit calculations.
That has always been the case but as of about a week ago there is a new declaration requirement to the Canada Revenue Agency on the sale of real property. I wouldn't be surprised in the not too distant future that there may be information sharing between the federal CRA and provincial land registry. This has been a large dollar revenue reporting gap that I am surprised has been ignored for so long.

Remember that in reporting capital gains you get to deduct your inputs so keep all your bills.
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Old 10-22-2016, 10:39 PM   #15
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Re: looking at buying fixer upper to flip or sell


Already gutted? Well, that's a help ... but still ....

You'd probably be better off tearing it down and starting over, from the sewers up. It sounds a lot like the house I'm working on right now.

Being realistic, 1000 sq. ft. is a "two bedroom" house today. Folks want bigger bedrooms and baths than before, and they want there to be laundry.

Canada? Well, if those walls are framed with 2x4's, you'll never insulate them enough.

I don't know the condition of your attic and crawl space. For my remodel, I'll have to lower the ceilings a bit, so I can run the new power and plumbing within the 'conditioned' space.

PM me if you want to get into a detailed discussion.
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