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September 23, 2016 in Buying Toronto Real Estate, Canadian Real Estate Market, For Sale By Owner, Location, location, location, New in New Homes, Pay what you want listings, Real Estate Investments, Save on Comission Fees, Selling Toronto Real Estate, Sold Watch, Toronto MLS Listings, Toronto MLS Sales, Toronto Neighbourhoods, Toronto Real Estate Trends, Toronto Real Estate Update, What's next (in real estate) | Permalink
Is your house key to your retirement?
Rechtshaffen writing in the Globe and Mail says:
"My mother, who is a real estate agent, has often mentioned to me that if you live in a city your whole life, the only significant real estate purchase and sale decisions are the timing of your first home purchase, and the sale of your last house. The logic behind that statement is that if you sell your first home in a down market, you are also buying your second home for cheap, so to some degree, your losses balance off against your gains."
See article by Ted Rechtshaffen in the Globe and Mail »
Five must-haves for flipping houses
By Glenn Curtis
Many people assume that they can simply 1) buy a house, 2) apply a fresh coat of paint, 3) trim some bushes, and then 4) resell the home at a profit. Unfortunately, this process, called "flipping" is not that easy. After all, if it were, everyone would be doing it. There are several skills and people that every potential investor/flipper should have in place before even considering entering into a real estate transaction of this nature. Here are the top five "must-haves" you'll need to succeed in this endeavor.
1. A Group of Experts
While a house flipper can certainly go it alone, it will certainly help to retain individuals that are familiar with the legal, accounting and construction ramifications of flipping houses.
Flippers typically work against the clock, so they must renovate a home on budget and then turn it around and sell it before the financing costs eat up their profits. In any case, a bevy of experts including a real estate agent, a lawyer, a contractor or renovator, an accountant, a home inspector and an insurance agent can ensure that the work is completed in a timely and efficient manner.
2. A Handyman or Knack for Home Improvement
The house flippers that make the most money buying and selling homes tend to be handy people. That is, they have the ability to step in and lend a helping hand when time or money constraints kick in. Most flippers can do things like change a sink, install a countertop, do basic electrical or plumbing work, and/or shingle a roof.
Why is being handy so important?
The obvious answer is that if you can do the work yourself, you won't have to pay someone to come in and do it. However, there are other advantages to being handy as well. For example, there are times when it will be impossible to get an electrician to install an attic fan on short notice. There are also times when a job must be completed without warning at the last second in order to obtain a certificate of occupancy. In these instances, having the ability to navigate your way around a tool box is very valuable.
3. A Good Lay of the Land
The buyer should know about the area in which they are buying property. A buyer should know, for example, what characteristics (acreage, number of rooms, type of home, etc) are the most desirable in the area in which they are looking to buy. Equally important is knowing what houses in the general vicinity have sold for and if there is likely to be any future development in the community (such as a new school, condominium or shopping center) as this could affect supply and demand.
4. A Good Estimator
By definition, house flippers attempt to buy a property and then resell it at a profit in relatively short order. In order to do this, however, the flipper must typically make some structural and/or cosmetic changes to make the property more appealing to the next buyer.
If the flipper underestimates the costs associated with the refurbishment he or she may be exposed to large monetary losses. Therefore, a flipper should be familiar with construction materials (their use and their cost), as well as local construction codes, the cost of local labor and the time it should take to do a given job.
This is no small feat. In fact, it takes even the most seasoned construction professional many years before he or she is aware of all the nuances that exist. In any case, before becoming involved in "flipping", be certain of your abilities to estimate a job in terms of both cost and time.
5. A Dose of Patience
One of the biggest obstacles to making money in the real estate market is that buyers tend to overpay for a given property.
Why do buyers overpay?
Typically, buyers become emotionally attached to a property or develop some other bond with it, which in turn forces them to enter into a contract on less than favorable terms.
However, savvy flippers have the ability to avoid emotional purchases, and the desire to find diamonds in the rough and properties on the cheap. They also understand that if they aren't buying a property at a favorable price and with favorable terms, it makes sense to simply move on to greener pastures.
The bad news is that patience is a difficult virtue to teach and hone. In general, either you have it or you'll lose a lot of money trying to learn it.
The Bottom Line
While quitting your job and becoming a full-time house flipper may sound like an attractive proposition, be sure that you have these five "musts" before investing in a real estate project.
Let's make houses homes
Realtors still like to call them homes, because it sounds warmer, more friendly, and that plays a huge role in such an emotional purchase, but sometime in the last few decades, the home became the house. It has never been more apparent than in today's red-hot, yet volatile, real estate market, where emotions give way to dollars and investment sense.
In almost every community across North America, from Manhattan to Beverly Hills to Calgary to Toronto, real estate is more often talked about as an investment than it is a place to live.
Our parents have told us for generations that real estate is a good investment because it's the only thing they're not making any more of.
But even then, a home was a place to raise a family. Today, are they more often viewed as investments where people store an ever-changing, ever-growing collection of consumer items to impress visitors or simply reassure themselves of their own success?
Why, when the average size of the family has decreased so dramatically over the last three generations, has the average size of the family home grown exponentially?
Welcome to the new millennium, where the square footage of a kitchen has doubled or tripled at a time when eating out has never been more popular and eating in a vehicle is a national pastime.
Where kitchens contain all manner of gadgets from cappuccino makers to juice squeezers to bread machines to make "cooking" easier in an era when prepared foods have proliferated in the grocery stores.
Where bathrooms have become water palaces. Where the garage is bigger than ever and full of more cars than drivers.
Where children's bedrooms are decked out with the latest technology, from computers, to video games to televisions.
Where the dining room table doesn't get a lot of use.
Where the bookcases are bare.
With markets as jittery as they have been lately, and sales of existing homes in the U.S. in a downward spiral, and too many high-risk mortgages in jeopardy, it could once again, for better and for worse, make the house a home.