How do I find a good home to rehab?

In my experience, it is usually the real estate agents who come across properties that are excellent candidates for rehabbing. Most realtors will be happy to send you new listing as they come up.

Look for homes that have been neglected from a maintenance and cosmetic standpoint, but without serious structural problems. Every house will have a different potential for return on investment so educate yourself on the neighbourhood and what you might realistically expect to get.

If you look for vacant, abandoned or boarded up properties, you can often get the owner to help with the financing by way of a “vendor take back” mortgage. Not only are they motivated, but knowing that you intend to resell the property in the near future all but guarantees a quick return of their funds.

How do I estimate the cost of repairs?

This is not as difficult as you might thing. Once you have flipped a few houses, you will have a pretty good grasp of what things costs.

For those repairs you cannot do your self, you will need to find professional contractors. The best way is through referrals. Whenever using contractors, get a few quotes and referrals and make sure they put everything in writing. Once you find the best contractors, you can stick with them from project to project.

If this is so great, why doesn’t everyone do it?

The first reason is time. Time commitments vary from project to project and from person to person. If you plan on six months from start to finish, this means you will not see any profit for six months. Hopefully, your project will be completed sooner, but it could also take longer!

The second reason is the seed money. You have to come up with money for these projects not only to purchase and repair the property, but to carry the associated costs of another house until closing. A good deal with great potential is lost if you cannot afford the initial investment.

You also have to learn that financing is not always straight forward. Qualifying for a mortgage depends on things like credit rating, income, down payment, etc. Few conventional lenders will be anxious to lend based on your projected returns so you may have to turn to a broker who is specialized in hard-to-place mortgages.

I have the house, now what?

Once you have the house and can start on the project, you really need to keep one thing mind – your goal is set your house apart from every other property for sale in your neighbourhood.

Since curb appeal gets them in the door, get the front of the house looking fantastic and replace the roof and windows if needed. Buyers like to see that these items have been replaced due to their perceived expense. Modernize the landscape and outdoor fixtures and doors. The house that looks up-to-date is going to attract the most attention.

If your house does not have central air conditioning, have it installed. Not having central air tends to solicit a negative response, since it is almost expected now.

Hardwood floors are extremely desirable so if your house does not have hardwood floors that can be refinished, have them installed. If your budget prohibits the entire house from being fitted with hardwood, just do the living room and dining room. There are plenty of inexpensive but modern choices in ceramics and carpeting. Bathroom and kitchens sell houses, so plan on spending the bulk of your budget on these rooms. Try to incorporate some luxurious touches that add that extra appeal – such as whirlpool tub or potlights.

I’m done, now what?

Much like a model home, you need to present your rehabbed home in the same light. Borrow or rent tasteful furniture and accessories to demonstrate to your potential buyers how well the house functions.

Rehabbing or flipping houses is not for everyone and it is not guaranteed income, but it is fun and potentially rewarding for those who like a creative and hands-on approach to earning money!