Page 21 - Real Estate Now Sept-Oct 2021

Flip or Flop: 4 Things to Consider Before

Buying a Flipped Property

Alex Dery courtesy REALTOR.ca
uying a flipped home—a property that’s been purchased, renovated, and re-sold by an investor—is all the rage these days,
and for good reason! It’s an enticing idea, especially since you get to move into an already-updated home without having to
Bhandle the renovations yourself.

Amid the COVID-19 pandemic, the Bank of Canada saw evidence of “a lot more flipping” driving investor activity in some Canadian
housing markets, as housing prices across the country rose 25% in February over the previous year.

It’s easy to jump headfirst into a flipped home because everything seems shiny and new. But it’s important to weigh the pros and
cons to avoid a potential headache down the road. Here are some things to keep in mind when looking to purchase a flipped home.
1. What’s your budget?

Remember: Investors flip houses to make money. The average investor can make thousands in net profit on a property flip—that’s
why they undertake the risk, effort, and financial investment to renovate a house they don’t intend to live in. As a result, you’ll
probably end up paying a higher price as a sort of “convenience fee” for someone else taking care of all the renovations. You’re the
one benefiting from buying a freshly renovated, move-in ready home, so it can be worth that extra cost. Just be sure the higher price
tag for this convenience doesn’t strain your budget!

2. How long did the flip take?
Flipping a house takes time to do it properly, but the longer an investor holds onto the property, spending money on remodeling,
the less profit they’re making. This may cause the investor to rush the flip and even cut corners on safety or quality of construction—
not great for you, the potential buyer.

It might be a red flag if a house has been flipped in three months or less. However, different projects will take a different amount
of time. A full flip will take longer than a kitchen or basement redo. Plus, timelines will vary depending on who’s completing it!
Work with your REALTOR® to find the full history of the house, specifically the date and price of the property’s last sale, to help verify
when work began. Additionally, contact your local building department to check if the investor obtained the proper permits and
the home is up to code. More on this in a bit…