In real estate the term “Flipping” refers to a transaction that includes purchasing a property and reselling it shortly after to make a quick profit. This concept has become more prominent in Quebec in the recent years with the arrival of TV shows where investors buy, renovate and quickly resell properties with significant gains.
Regardless of whether you are an experienced buyer who participated in real estate investment projects before, or just a newcomer who wants to find out what stands behind the term “flipping”, you have chosen the right place to learn more about more sophisticated types of “flipping” strategies. There are two most commonly employed “flipping” strategies:
The first is to “flip” your own home;
The second is to “flip” real estate purchased at a price lower than the regular market price, and then resell it shortly after at a certain profit.
These are the classic scenarios that are fairly simple and time honed. They work especially well when there is a clearly defined master plan behind each step, and support of an experienced real estate broker. When starting such a project, you must make sure that the risk that the money invested in the purchase of the property and renovations will not exceed the sale price is minimized. As a businessman, you are looking for profit, thus the project must be realistic and profitable. My team of real estate professionals and I will help you not only to find real estate property in Montreal that matches your financial capabilities, but also to make calculations for you in order to find out whether the purchase will be justified.
If the “classic” scenarios do not apply to your case, check out these fewer known types of “flipping” strategies, among which you may find an option that fits your situation:
Cosmetic – Flipping – if you purchase real estate property at a price lower than the market price, and it does not require major renovations, then it is possible to do only cosmetic repairs that are usually inexpensive (especially if you do not need to remodel the kitchen or bathroom). As soon as the construction is completed the property can be resold. The advantage of this investment strategy is that the initial investment is relatively small, and the turnaround period of the project is quite short.
Flipping – As Is – If time plays an important role for you, and the price of acquired property is significantly lower than the market price, then you can sell it as is, without performing any additional work. This strategy, even if it is associated with time risks, allows you to get almost an instant profit if the sale takes place shortly after the purchase.
Flipping – Conversion – In order to maximize profit from a property you acquired you can decide to redesign and repurpose it. The advantage of this method is that you have the opportunity to change the layout of the space and, for instance, turn a large house into several apartments, and sell or rent them separately to get a higher profit.
Flipping – Construction – Real estate property often costs significantly less when you buy it at the stage of construction. Thus, buying a share in a project before construction is completed, your benefit will be the difference between the price of the initial investment and the final after the construction is completed, provided that the real estate market in the region of your interest is stable and the price increase meets your expectations.
Flipping – Rental with an Option to Buy – You can buy a property and lease it to a tenant who will buy it from you in a while. This option is optimal for those investors for whom time is not the key factor, as it takes into account the possibility of financial difficulties for your tenants may meet before closing the transaction. Nevertheless, it is very important to make sure that the rent covers your mortgage payments so that you do not lose money in anticipation of closing the transaction.
Flipping – Homeowner – If you do not own a home, you can buy it and then resell it without paying taxes on the profit you make. However, you will have to wait several months between the buying and selling transactions.
As you can see, the concept of “flipping” requires a rather subtle understanding of the real estate market and clear planning, which should not be taken lightly, as this can lead to greater financial risks. I will be happy to advise you on all aspects of “flipping”, help you find the right property to investment in, reduce the risks of your investments and increase profits. May you have many successful projects and see you soon!
