Flipping Houses for profit in Canada can be risky business, especially if you have never done it before. Flipping Houses has a certain sexiness to it which a lot of people are attracted to it. That is why there are so many reality TV shows about renovations and flipping. It is cool, fun and very profitable; well at least on TV.
I have done numerous fix and flip projects in Ontario and made good money from them. I am not writing this to brag about myself, as there has also been a ton of sleepless nights associated with them.
I have dealt with a slew of issues in the process, here are a few of them just to name a few:
- major plumbing issues where it cost me $8000 to replace the drain pipe from the basement stack to the city connection across my front lawn
- Vandalized properties from bad tenants living inside a Fourplex when I first purchased the property.
- intense cat urine smell soaked in the carpets for a few months
- Leaky basements with mould
- City Inspectors fining me for garbage on the property
- Insurance company denying us after $120,000 in damages from a fire
- Sewer backup atleast 5+ times
Flipping Houses for profit in Canada requires a thick skin and a knack for problem solving. You have to treat every issue as a challenge to learn from your mistakes and try not to repeat them.
My strategy for flipping houses for profit in Canada has evolved over time into what I now call My B.R.R.R Strategy. This is what the acronym stands for:
B – Buy, R – Renovate, R – Rent, R – Refinance
This is a very powerful strategy as it combines Flipping (Short Term) and Investing for Cash flow (Long Term) to ultimately build wealth in a sustainable way. As a matter of fact, I was invited to speak on this strategy at the Investor Forum held by Canadian Real Estate Magazine at the International Center in Mississauga. Check out the video clip below:
This strategy involves buying an undervalued property that requires renovations. The amount of renovations could be from $3,000 to $103,000 depending on the property and how the numbers work. The idea is to force the appreciation on the property (same way as you would with flipping) and then renting it out so all your expenses are covered and you get a few hundred dollars $ in cash flow (rental income subtract all your expenses). When the time is right or whenever you need the money to re-invest, you refinance the property and take the cash out to repeat the process.
This strategy has worked out really well as I get to still own the property and benefit from it over long term but at the same time, I can get the equity out to buy another property. This has now turned out to be my Ultimate Flipping Houses for Profit in Canada Strategy.
So until next time, happy Canadian Real Estate Investing.
Jose Jafferji, REIA