Robert Francis Real Estate Agent Robert Francis - RE/MAX Hallmark Francis Group Realty Ltd., Brokerage

Caution: First Time Flippers! 5 Mistakes to Avoid in the Toronto Market

10 May 2017
ROBERT FRANCIS

Flipping Home in Toronto Remax Hallmark Francis Group Realty

Here's insight into some critical mistakes I have observed that are made by the first-time property flippers. You need to try to avoid making these mistakes to minimize your risks.  These tips are from my experience from working directly with real estate investors to help positon first time flippers toward potential for success and profitability. The content in this blog post is simply my observations and not meant as instructional or legal advice.  

  1. Insufficient Finances

In order to start your Toronto real estate flipping business, you need to have a sufficient amount of money in hand. Real estate flipping holds immense profit for the flipper that can only be reaped in return for the investment you initially made.

Properties are a pricey investment and you need to establish a financial fund so that you do not miss out on a potential opportunity merely due to the lack of finances. You have to make yourself financially ready to be able to bear the costs involved in acquisition, mortgages, renovation, taxes, interests and other carrying costs associated.

  1. Lack of Time

You will have to oversee a host of essential processes such as visits, inspections, and negotiations, which will require your immediate presence and accessibility. You need to understand that property flipping is difficlut to run as a side-business or part-time job and requires your optimal time and efforts.  If you are running it as a side-business, partnering with the right real estate agent who has success in seeing a homes potential is critical.  

It takes a considerable amount of time to acquire property, renovate it, wait for the market to turn more favorable and then sell it back while keeping a decent profit margin. This time phase may extend up to months or sometimes longer. Therefore, you need to be patient as well as instantly available to respond whenever a good opportunity comes your way.  Take for example the Leslieville real estate market, just a few years ago it was not as desirable a market.  I have lived in the Leslieville, Riverside and Riverdale markets for many years and now the market has turned, its a great time to sell my home in Leslieville. 

  1. Skill Deficiency

The essence of profitability of property flipping lies in sweet equity and your sweet equity can only be optimized if you have the right skills. It is not just a process as simple as buying property, keeping your margin and selling it off.

You need to have some essential skills that you can use in renovations and interior designing to give the property a fresh facelift. This will help save expenditures that you will otherwise have to incur in hiring professional renovation and designing services.

  1. Lack of Knowledge

A firm grasp of market knowledge, real estate regulation and economic trends is crucial if you want to success at your flipping business.

Additionally, you also need a sound knowledge of your locality so that you may pick the right property at the right price and time. Without this understanding, you won't be able to reap any significant profits.

  1. Not Calculating the Risks

Consider all the risk factors involved that might affect a specific deal or your overall business.

Overlooking the risks that might evolve in the wake of the changing Toronto housing market dynamics or regulatory controls may cost you your entire investments and even get you involved in some regulatory loops.

Important Notes:  This blog post is not intended to attract buyers and sellers who are in contract with another agent.  The content in this blog post is simply my observations and not meant as instructional or legal advice.