48Connor
Well-known member
I always look at these places and think; "Did someone run out of money, loose interest, or did they encounter an issue they couldn't fix?"
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COVID and the housing market
- Thread starter mimico_polak
- Start date
Mad Mike
Well-known member
Yes, there are always issues with the right side of town however if you're not going to live there who cares? Every location has a market price, as long as you have a gain it's just business.
I think I've mentioned this before, I have sold small houses to first time buyers by providing them a down payment, there are lots of folks that can qualify and afford a mortgage but have trouble saving. Twice I've selected renters that wanted a rent to buy arrangement, after renting for a year I sold them the house by returning their year's rent as a down payment. If it's a low priced property, returning $12K in rents for them to use as a down payment on a private sale at your full asking price is a Win-Win.
And a sweet Porsche in the driveway.
Mad Mike
Well-known member
My experience is all of the above. Usually a keen first timer who went at it without a plan. They gut the place, get the basics started then find an insurmountable obstacle or went at it thinking they could renovate by diverting a little time and money as they go. The reno takes too long, they encounter a major expense they can't finance -- once out of money, they get frustrated and quit.
The value of a gutted then partly reno'd house can be well below the pre-deconstruction value as many of these places can't be mortgaged.
The last one I found cost the previous owner $139K in 2016, my son picked it up for $42K in August last year (I'm teaching him the ropes). When it's finished he'll have another $50 into it and plans to liver there. I was expecting it to be worth $200K when it's done, we just got the major repairs done to the point where it can be mortgaged, the valuation came back at $180K. Based on comps, if the reno was completed it would be close to $250K.
Also lots of people watch too many flip tv shows and think that those prices are real (they conveniently exclude hundreds or thousands of hours of labour and profit and ...). If you are planning on paying to get the majority done instead of sweat equity it is a really tough gig.
Mad Mike
Well-known member
Hope they tossed in the Porsche
Mad Mike
Well-known member
It is tough. The first one I tried cost me huge, I made every rookie mistake thinking it was a fast and easy way to get rich.
You need a plan. You need knowhow. You need connections. And you need to be flush with cash.
I keep hearing about those Reno twins doing their ‘get rich in real estate’ conventions. They’re promoting this mentality and making it seem like it’s no big deal.
my old agent, and his son are also doing the same courses.
Everyone promoting it is making it seem like the easiest way to make money ever. Easiest way is selling the dream to people and then pulling the plug when they get stuck.
Ive mentioned it before, but my old realtor would offer interest only loans to flippers, if you don’t pay he keeps the house. He got a lot of houses like that. Then he flipped them for fun.
moarmoto
Well-known member
Nah, probably the agent's. I walk by daily walking my dog and never seen it.
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Deleted member 50930
Guest
Banks won't lend on a property that in uninhabitable. A friend started building his own but spent too much on construction equipment, ran out of cash and the bank wouldn't loan him money to finish the house. He should have financed the construction equipment.
I think family bailed him out until he got an occupancy permit and the bank opened their doors to him again.
Mad Mike
Well-known member
Lucky. A lot of first timers end up dumping the property.
I’m trying to scoop one now, when the flipper bought it, it was habitable and he got a mortgage. After gutting, he can’t renew and his 1 year term ends soon. The owner will be taking a $20k haircut on the property plus whatever he put into gutting, roughing in plumbing & wiring, insulation and drywall.
Anyone can do a quick reno and make a bundle.
Buy a "What's the latest" Home reno magazine and watch a couple of YouTube videos.
1) Tear out the tacky cheap paneling in the pseudo den and paint with the colour de jour.
2) Oh. The paneling was to cover the lousy drywall. Well, drywall is cheap and there's a video for that so rip out the drywall.
3) Oh, again. The drywall was crappy because there was a water leak and the studs are also rotted. Google "Replace wall studs."
4) "Replacing studs" video mentions "Bearing wall"
5) Get more beer.
6) Wall contains wiring and plumbing. Google "Wiring" and "Plumbing"
7) Go to Craigslist "Free". Find an old Archie Bunker type easy chair and bring it to the site.
8) Sit in crying chair and try to enjoy the beer.
Every site needs a crying chair.
You're flipping not living in it. When you find expensive issues, just cover them up and paint with colour du jour as per the plan. Grr.
Exactly. Pass it to the next guy. That’s why I never buy homes that were ‘freshly updated/renovated/cared for’. You’re inheriting someone else’s problem.
give me a house that had the same person living in it for 10+ years. At least I have an idea of what to expect.
Mad Mike
Well-known member
If you want good money, do good work. Take pictures, get permits and inspections.
There are lots of cheesy reno’s and people buy them. I find doing things right is cheaper and you can make more money.
It depends on your market. In toronto where it is red hot and many of the buyers have no idea wtf they are looking at but "look at all the nice grey paint" you can get away with a lot. There was an article where a dbag flipper had put 3 pin outlets on a 2-wire house (with no attempt to ground) and priced low to get a bidding war so any with an inspection condition could be tossed. You can get a handful of buyers that dont know any better sending the price to the moon whether on not you did a good job behind the finishes. In smaller markets, I find you often have more blue collar (ie useful) buyers that see through the smoke and wont buy garbage.
bigpoppa
Well-known member
By the time you find that smaller market in ontario, you'll be sharing your yard with a moose.
That's where MM is working. Hell, moose are in backyards many many hours south of his current area.
Sounds like 10 or so years back for next door. Same owners for decades and nothing done in the way of updates. Parents passed away and kids sold to a flipper. He modernized the look and ticked all the boxes for fast stuff, making it sound like a new house, new windows, roof, furnace and obviously decor. Outside got a bling over and sod over grass landscape job.
The new owners got a money pit with water leaks and failing ceramic floors. Fortunately they had decent jobs and could cover the costs but it would bother me to do that to someone and find out that they couldn't handle it. Needless to say, the market has been kind to them lately.
I've been lucky not getting conned too often and not mortally wounded when it did happen. I've seen others get destroyed.
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