All too often, people watch Property Brothers on HGTV and think—I could do that. But it’s a lot more work than any TV show makes it out to be. It requires a lot of knowledge and cash up front if you’re going to truly make a profit off the home.
Avoid going into debt for it. Most will advise you to fund the flip with cash, since house flipping can be risky and is, therefore, not worth going into debt for. If you do take on debt, you are paying interest for months, meaning the selling price of the home will have to increase just to break even. It will also make you more likely to lower the price of the home just to sell it—cash flippers can afford to wait out a slow market.
Know the market well. You might think you’re getting a good deal on an affordable house you can fix up, but a real estate agent with expertise in that particular neighbourhood will be able to tell you exactly what other homes in the area are selling for, so you can be sure you are making a wise investment. Otherwise, you could end up investing a lot of money to upgrade a home that won’t sell.
Stick to your budget. You should have your budget in place before you purchase the home, so you know exactly what you have to work with and where it will be going. You should know how much you have to put toward buying the home, making any repairs and finishing all renovations.
Renovate wisely. While it’s tempting to completely renovate the kitchen, the numbers on kitchen renovations show that it can be a money loser at the end of the day. While many high-end kitchen renovations cost over $40,000, the average recouped value is around 59 percent, meaning it will not net you the profit you are looking for. Smaller fixes like updating old appliances, refinishing cabinets and working on the landscaping will have a higher ROI.