Personally, I'd look for properties that are cheap for the location/size, not properties that are run down.
I went to an MLS listed house here in Calgary during the depths of the recession that was listed for 160,000. It was gutted down to the studs, and needed a complete renovation. That's work we could do, so we went and had a look. We estimated a post reno sale price of $220k, 10k in selling costs, a 20k reno budget (materials and a few trades, doing most of the work and contracting it ourselves, based on 3 recent reno projects, so it was a good estimate), and a 25k buffer to cover carrying costs, contingency, and my profit. So we were prepared to offer 165k. The property sold for $225k, after a steady stream of people in toolbelts came through to look at it. So even though it was run down, it wasn't a deal.
In a similar fashion, I made an offer on a run down condo of 160, and lost out to another bidder. Now the condo is back on the market (9 months later), totally renovated, and its been price reduced down to 180. Do you think either of these people made money?
If you find something that is well under its value, and its in good shape, why wouldn't you buy it? The goal isn't to practice doing renos, its to make money. If you can get the same discount without doing the reno, spend a weekend in Banff with the reno time/money, and enjoy your profits. If you are going to do a reno, make sure you get a big enough discount.
Regards,
Michael
I went to an MLS listed house here in Calgary during the depths of the recession that was listed for 160,000. It was gutted down to the studs, and needed a complete renovation. That's work we could do, so we went and had a look. We estimated a post reno sale price of $220k, 10k in selling costs, a 20k reno budget (materials and a few trades, doing most of the work and contracting it ourselves, based on 3 recent reno projects, so it was a good estimate), and a 25k buffer to cover carrying costs, contingency, and my profit. So we were prepared to offer 165k. The property sold for $225k, after a steady stream of people in toolbelts came through to look at it. So even though it was run down, it wasn't a deal.
In a similar fashion, I made an offer on a run down condo of 160, and lost out to another bidder. Now the condo is back on the market (9 months later), totally renovated, and its been price reduced down to 180. Do you think either of these people made money?
If you find something that is well under its value, and its in good shape, why wouldn't you buy it? The goal isn't to practice doing renos, its to make money. If you can get the same discount without doing the reno, spend a weekend in Banff with the reno time/money, and enjoy your profits. If you are going to do a reno, make sure you get a big enough discount.
Regards,
Michael
[quote user=flyingsquirrel]I am thinking of getting a run down property for renovation and flip.
How can I locate these kind of properties?
drive around .. hang a notice on doors of houses that look ugly to you ..
flyers ..
ads in the paper and its online equivalent: Google Ads, Kijiji, craisglist ...
word of mouth ..
flyers at places where people with ugly houses hang out: Wal8Mart, HomeDepot, Pawnshops, ValueVillage ..
How can I locate these kind of properties?
drive around .. hang a notice on doors of houses that look ugly to you ..
flyers ..
ads in the paper and its online equivalent: Google Ads, Kijiji, craisglist ...
word of mouth ..
flyers at places where people with ugly houses hang out: Wal8Mart, HomeDepot, Pawnshops, ValueVillage ..
[quote user=flyingsquirrel]So how about foreclosure? I was told that usually the foreclosure is not that much cheaper than the regular sale.
I think its hard to make that generalization. There are good deals available that are foreclosures, and there are some foreclosures that are terrible deals. Just like there are good and bad deals on other MLS listed properties, the private sale sites, kijiji, the REIN classifieds, and your local supermarket. Your job as investor (or smart grocery shopper!) is to sort the good deals from the bad deals, and find one that works for you.
Regards,
Michael
I think its hard to make that generalization. There are good deals available that are foreclosures, and there are some foreclosures that are terrible deals. Just like there are good and bad deals on other MLS listed properties, the private sale sites, kijiji, the REIN classifieds, and your local supermarket. Your job as investor (or smart grocery shopper!) is to sort the good deals from the bad deals, and find one that works for you.
Regards,
Michael
In addition to the great suggestions already given , let me add my 2 cents. Talk to mortgage brokers & lawyers who can direct you to those needing to un load their homes.( Mortgage arears, divorce, mould, etc. ) If you wait till their listed with the real estate your paying more for the property. In addition to driving the neighbourhood looking for the right buy ,place an add stating " we buy ugly houses ". And remember, you gotta have fun doing it :>)
Doug
Doug
[quote user=flyingsquirrel]Actaully, I am interested in Hamilton too.
Can you refer to me those realtors?
Feel free to give me a call if you're interested in investing Hamilton. Check out my blog as well as that is a good first step in researching the #2 city in Ontario. I just so happen to be in touch with a vendor right now who's in trouble with the bank.
thanks,
Erwin
Can you refer to me those realtors?
Feel free to give me a call if you're interested in investing Hamilton. Check out my blog as well as that is a good first step in researching the #2 city in Ontario. I just so happen to be in touch with a vendor right now who's in trouble with the bank.
thanks,
Erwin
