Is there such thing as "flipping a home" in Toronto & GTA?

We have been hearing a lot lately about real estate prices, number of sales, etc and what do they mean?  It means that Buyers (for the most part) are not frenzied Buyers like they were earlier this year.  It means that the Buyers have options now and that means more inventory of homes for sale.   In short, it means that the real estate market is healthy.  When the real estate market is healthy, it makes for flipping a home a tad bit easier.   Complete "tear down" homes that once sold $300,000 over asking can now be bought at list price, or under its list price.  

There are many reasons why you may want to renovate your home. You might want to renovate to get the most money when selling your home or renovate to enjoy what you live in, but either way, investing in your home is generally a smart move that will give you a good return. 
The big question is, what should you renovate, and where will you get the biggest return If you do decide to take the flip route and so I've compiled a list of worthy fixes that will get you the most value per dollar spent.  Please note that each city is different and the return can fluctuate considerably from one city to the next. 

  • Exterior siding replacement 90 - 100% (If you spend $1.00 for exterior siding, the value added be worth $1.90 - $2.00 for every $1.00 spent.  So if you spent $10,000 to replace exterior siding, it would add $19,000 - $20,000  to the overall value overall of your home.)
  • Bathroom Renovation 75 - 100%
  • Kitchen Renovation 75 - 100%
  • Exterior Paint 50 - 100%
  • Interior Paint 50 - 100%
  • Roof Shingle Replacement 50 - 80%
  • Furnace / Heating Upgrade 50 - 80%
  • Basement Renovation 50 - 75%
  • Window / Door Replacement 50 - 75%
  • Build a Deck 50 - 75%
  • Construct a Garage 50 - 75%
  • Recreation Room 50 - 75%
  • Adding a Fireplace 50 - 75%
  • Flooring Upgrade 50 - 75%
  • Install Central Air 25 - 75%
  • Build a Fence 25 - 50%
  • Landscaping 25 - 50%
  • Interlocking Driveway 25 - 50%
  • Asphalt Paving 20 - 50% 
  • Adding a Swimming Pool 10 - 40%
  • Install a Skylight 0 - 25%

There are many Sellers who sold in late 2016 and early 2017 who did not buy a home.  Many sat idle and waited for a market correction.   We saw a bit of a dip in prices and we also saw an increase in inventory, however it seems as though the market has stabilized and the big price drop that many were waiting for, did not happen, however the inventory continues to grow.  Those same Sellers who were sitting on the fence and waiting to buy low have grown impatient and a fresh batch of Buyers has come again.  This means that homes that are priced "well" are usually the first ones to get picked up.  If you want to "flip" a home, then there are a few things to consider such as, market vulnerability, location, list to sale ratio, accessibility, etc.  Outside influence such as the stock market, or political strife can reek havoc on the real estate market.    We continue to see the stock market reach record highs and we also are watching a world in political turmoil.  All it takes is something drastic to happen and suddenly people freeze all spending and home prices drop considerably.   Also, flipping a home in Toronto is not as easy as flipping a home outside of Toronto.  There are many Buyers who are still buying in towns like Georgetown, Orangeville, Alliston, Tottenham and Bradford to name a few.  Pick a home in Toronto and drop it 45 minutes North of Toronto and the difference in list price will be considerable.  This means that you can buy a home for less, spend roughly the same on updating it and the return on and of your investment will be roughly the same. 

So, to sum it all up, yes, home flipping is possible if you can wait for the right home and strike fast.  Multiple offers are not as prevalent as they once were, so submitting an offer the day it is listed is a possibility.   If you do take that risk of purchasing a home with the intent to flip, then it is advised that you weigh all the risks and have a plan in case the market turns and you have a home worth $100,000 less than what you put into it.   As of today, the market is in limbo.  Sellers still want to see their home sell for record prices and Buyers want to purchase a home at a reasonable price and without the hassle of multiple offers.  It is safe to say that if you were to buy a home today and spend 3 months renovating it; when the spring market comes, you will see a return.  Just remember, that in the end, any investment is a risk and you always have to be prepared for the worst. 

 

jay vroom