Tag: homebuyers

Flipping Houses For Profit [A Guide For Beginners In Canada]

Post author By souqh_admin
Post date March 8, 2022
No Comments on Flipping Houses For Profit [A Guide For Beginners In Canada]

If you have been watching the Canadian real estate market and seeing prices go through the roof, you have probably wondered if you are not missing a trick by not investing in a few properties yourself. Flipping houses is an especially hot trend right now.

Before you cash out all your investments and go all-in on flipping houses for profit, know that it’s not all sunshine and rainbows. Like all other investments, you can lose money if you don’t do your homework.

We prepared this short guide to help you understand what flipping houses is and the factors you need to consider before buying that fixer-upper for flipping.

What Is House Flipping?

House flipping is where you buy an old, distressed house and repair and update it with the intention to sell it at a profit. ‘Flipping’ itself refers to the process of repairing, renovating a house to bring it up-to-date with current trends and at times to add square footage and features that make it livable and more appealing to buyers.

When the time comes to resell the house, you want the total spend from buying the property, renovation costs, and any applicable fees and taxes not to exceed the expected value after repairs. Now, in a market such as Toronto where home prices are going up all the time, your chances of selling at a profit are conceivably good.

Many beginners will take out a mortgage loan to finance a house purchase. If that’s you, you need to find a mortgage broker that understands this business and your local market as a first step.

The second and perhaps better option is to deep into your savings and pay cash for the house, the renovation/repair, and all the other costs involved.

With so much money on the line, you have to know what you are doing for a flip to be profitable. Here’s what you need to keep in mind before you start flipping houses:

What You Need To Know Before Buying A House To Flip

There’s money to be made flipping houses. But one thing you need to know, though, is it’s not as easy as they make it look on HGTV. There is a lot of work and money involved, some of which can go down the drain if you don’t take note of the following:

1. Flip With a Target Buyer in Mind

The best way to approach flipping houses is as you would any other business. You start with a customer need in mind and then work out how to satisfy it in a way that is profitable to you. In this case, the need you are hoping to meet is that of suitable, affordable housing for a specific type of home seeker.

If you blindly buy and renovate properties without any idea who your potential buyer is, your chances of success are slim. The flip can take too long to sell, resulting in you incurring carrying costs that will eat into your profits. In the worst-case scenario, you may be stuck with an expensively renovated house that no one wants to buy.

So you need to identify a target buyer first to get an idea of the type of house you need to flip. This could be old couples downsizing to a smaller property or young professionals looking for a family-size home to plant roots. These people prioritize different features and amenities in a home. Also consider a specific location’s proximity to schools, shopping, health facilities, sports and entertainment venues, and clubs.

2. Draw a Realistic Budget

With a clear idea of the type of house and location you have to shop in, you can now draw up a realistic budget for this flip. Because you have profiled your target buyer and know which features are important to them, you can know the first time you inspect a potential flip house what renovations it will need and how much it will potentially cost.

It is quite easy to neglect some costs, which can only derail the project and cost you money later. The obvious costs will be the property’s purchase price and the renovation costs. But there are other costs involved in a house flip, like building permit fees, capital gains tax, staging and other selling costs.

Unless you already have a buyer waiting in the wings, you also have to budget for the house’s carrying costs. These are the costs that a homeowner pays, including the mortgage, utilities, property taxes, insurance, and general maintenance. You pay carrying costs as long as the house remains unsold, so you must have an allowance for them in your budget.

3. Know the True Renovation Costs Before Buying a Fixer-upper

The savviest house-flippers are those that can identify homes that only need a few repairs and cosmetic touch-ups to bring them up to date. The less you spend on repairs the better your chances of turning a profit.

If you spend a lot on the renovation, the problem is the house will be too expensive than buyers are prepared to spend for houses in that neighbourhood. This point highlights the need to engage a knowledgeable contractor.

An experienced contractor will know after a careful inspection how much work and investment it will take to bring a house to a livable, modern condition. A wall may need to be knocked out, windows enlarged, the roof raised, and floors replaced to improve energy efficiency and ease of maintenance.

Just recently, Canada experienced a crippling lumber shortage that saw prices rising to record highs, so always factor in changing market conditions when going into this business.

A good local contractor will have a better understanding of the current prices of materials and the general logistics of carrying out a renovation like the one you are planning. So resist the urge to go the DIY route and hire an experienced local contractor.

4. The 70% Rule

There should be no room for sentiment when reviewing houses for flipping. No matter how good the location is and how much demand there is for that type of house, do not overpay on the purchase price.

The 70 percent rule of flipping houses is when buying a fixer-upper, you should not pay more than 70% of the after repair value (ARV – the home’s value after it’s repaired) minus the repair costs. Pay more than 70% APV and your chances of selling at a profit or recouping your investment reduce.

5. Flipping Houses Requires a Significant Time Investment

As well as capital, it takes a significant amount of your time to find a house to flip, renovate, and sell it. It could be months before you close a sale on your flip.

Even where you have hired a good contractor to do the renovation work, you will still need to manage them to ensure the work finishes on time. It’s worth sitting down and considering if you will have enough time to manage the flip, especially if you have a full-time job.

Finding the right property can also be a game of patience. You have to have the fortitude to wait as long as it takes to get the right property. With more flips, it will get easier to identify houses to flip and negotiate good purchase prices.

6. Hire the Right Skills

We have already talked about the importance of engaging an experienced local contractor. We should probably have led with how critical it is that you work with an experienced local real estate agent.

To succeed with flipping houses, you need to first identify and acquire the right property. A real estate agent with local experience will know how to pick the right property, in the right neighbourhood, and at the right price.

A realtor also knows the taxes applicable to your real estate investment, can tell at a glance if a property can be flipped successfully, and what features the renovation must prioritize.

Is Flipping Houses Profitable In Canada

The flip-for-profit business is growing rapidly in Canada. You would therefore assume people are driving good returns from it. The market conditions are certainly right for the business, seeing that there is a general shortage of available houses, even as prices keep rising.

Again, you need to do your homework. Just as there are people profiting from flipping houses there are many who are losing money. When starting out, concentrate on buying, renovating, and reselling one property at a time and slowly build your knowledge and experience.

Your goal at first should not be to maximize profit but to sell as quickly as possible to minimize risk to your capital.

Where To Find Experienced Local Realtors And Contractors

The secret to making money flipping houses as a beginner is building a team of capable local professionals who will plug your skills gap. A core team will have a go-to mortgage broker, real estate agent, and experienced contractor.

In Canada, the safest place to find these skills is on the Souqh real estate and home services market. Besides these professionals, you can also search Souqh for painters, real estate lawyers, plumbers, and all manner of real estate-focused services and contractors.The 70% Rule

Tags home renos, homebuyers, homeowners, Real Estate, renovations, toronto

Home Buyers

Top Pre-Construction Opportunities For Young Professionals In Canada

Post author By souqh_admin
Post date March 1, 2022
No Comments on Top Pre-Construction Opportunities For Young Professionals In Canada

Are you a construction industry professional looking for new opportunities? While there are plenty of jobs to go around on the construction phase of the many housing projects sprouting all over Canada, you have probably not considered the rich opportunities in the pre-construction stages of these projects.

This article will discuss the exciting work opportunities in the pre-construction phase of housing development projects in case you are looking to expand your horizons.

Canada’s Booming Housing Market A Boon For Construction Trades

Canada is facing a big housing crisis in major cities like Toronto. Burgeoning demand for housing, soaring home prices, and a very low stock of new houses all make for a red hot real estate market.

Lowering interest rates has been suggested among a raft of measures to cool the housing market and save cities like Toronto from the unwanted tag of being one of the most unaffordable cities in the world.

Fixing the supply side is, however, the only sustainable fix for Canada’s housing shortage and unaffordability crisis. This entails constructing new homes. And a critical stage of any construction project that determines whether it succeeds and finishes on budget is what’s known as the pre-construction phase.

What is Pre-construction?

Pre-construction encompasses all the activities that happen on a construction project before the actual construction work starts. This includes the necessary planning work, design, materials estimation and ordering, and the work involved in preparing the construction site, including excavating access roads and erecting a fence that secures the site.

Some of the pre-construction work will continue into the construction phase, principally to coordinate contractors and monitor progress, which ensures that the project proceeds according to design guidelines and overall project timeline.

The pre-construction phase isn’t just important for the success of the building project, but also for the health and safety of the workers on the project and the general public. For this reason, there are important roles that project owners must hire for even before there is an actual construction site to show. These are the opportunities we will discuss below:

Work Opportunities in The Pre-Construction Phase Of Building Projects

1. Structural Engineer For Existing Condition Analysis

Structural engineers analyze building designs against available construction materials and techniques to ensure the structural integrity of the completed structure. For this reason, they are important hires on large building projects.

That said, they also have an important role to play on remodeling projects, even if the building being renovated is a small family-sized home. The engineer must determine the safest ways to proceed with the remodel before any demolition work starts.

By carrying out existing condition analysis, the structural engineer will determine what scope the remodel will take or if it’s even safe to attempt it in the proposed scope. Sometimes a complete replacement of the structure is needed.

Material strength analysis and load calculations will need to be carried out and important considerations made to plumbing, roofing, HVAC, and other building systems to ensure they integrate seamlessly. So where a property investor is renovating or adding onto an existing structure there should be an existing condition analysis engineer among the very first hires.

2. 3D modeling specialist

While architects are responsible for the actual technical design of the building, a 3D model developer converts the drawings into a 3D picture that brings the structure to a form non-architects can visualize. There is now advanced Building Information Modeling software that building designers can use to create vivid 3D pictures of how a building will look like it’s completed.

A 3D model of the building will also help in the planning and building phases as well as in the landscape design. It also informs key decisions on structural design and construction scheduling. This helps to forestall issues that may derail the project.

3. Cost Estimator

This role is at the intersection of the quantity surveyor and cost accountant jobs. So on some projects the roles could be split into their more traditional forms. That said, the goal of the roles are the same – to have a solid idea of what materials are needed for the entire project and how much it will all cost.

In simple terms, an estimator determines the budget for the entire project. When coming up with a reliable cost estimate, they have to itemize such costs as materials, labor, permits, and equipment. As underbudgeting can have severe implications on the success of the project, a cost estimator needs to be a highly knowledgeable construction sector veteran.

4. Procurement Manager

Failure to source materials on time can stall the entire building project. Most construction material manufacturers have lead times that procurement managers have to factor in when placing orders.

For example, your project may require triple glazed windows for which there are only a few manufacturers. Place your order late and you may be forced to put the build on hold while the supplier processes your order.

Materials that you are shipping in from outside the country can often be delayed at ports so it’s critical to allow enough time between placing the order and receiving it. This is work that has to be done before you break ground on a project.

To succeed in this job, you will need to leverage a specialized supply chain. So you may be at an advantage if you already have contacts at major building construction material suppliers. As well as understanding the dynamics of the market you will also have to demonstrate an understanding of current prices to ensure the project achieves its cost budgets.

5. Phasing and Logistics Manager

A procurement officer will have to work hand in hand with another important pre-construction hire – the phasing and logistics manager. It is the job of the phasing and logistics manager to work out timelines for specific phases of the build. In this regard, they must work in consultation with the procurement manager to ensure materials arrive on time.

Importantly, there may not be enough suitable storage for the materials and equipment required for the entire project. So it’s critical that the timetable and logistics of bringing the materials to the site are worked out in advance.

Logistics management is an especially essential part of a construction project. Permit applications, inspections, deliveries, subcontractors, and different site services have to be well-coordinated for an orderly flow of work on the site.

6. Risk Control Officer

Major construction projects are a fertile ground for lawsuits and all manner of risks. From jobsite accidents and associated project delays to fines, poor workmanship disputes, and costly mistakes, construction projects are pre-exposed to many risks that will need to be mitigated against by hiring a properly skilled risk control officer as early as the pre-construction phase.

Contracts are another major sinkhole for construction projects. It is the job of the risk control officer to study all contracts entered into with subcontractors to ensure the language used isn’t vague that it may expose the project owner to lawsuits in the event of conflicts.

Beyond contracts, the risk officer will make sure that all construction site and general building regulations are adhered to and that all materials and construction methods meet expectations. If it is the project owners’ idea to protect their investment by buying insurance cover, it is the job of the risk control officer to shop for and decide on the best insurance policy.

7. Pre-construction Manager

Some project owners may find it best to bundle most of the above roles by hiring a pre-construction manager. You will have a good chance of landing and succeeding in this role if you have experience and skills in the roles we have discussed above. Here’s a similar job advertised on Indeed for a construction project in Mississauga, Ontario.

Where To Look For Pre-Construction Work Opportunities In Canada

Jobseeker sites like Indeed are good places to look for pre-construction work opportunities. But you will need to actively search these job boards for openings. With Souqh, a Canadian real estate and home services marketplace, homebuilders and property investors come looking for you.

How Souqh works is contractors and service providers in the real estate market get a storefront where they will advertise their services. Homebuyers, homeowners, and property investors who are renovating, remodeling, or repairing their properties come to Souqh to look for people with the right skills and local experience. They are drawn by the many tools and features that make it easy to compare and connect with contractors and service providers.

Sign up on Souqh and get your own storefront and online property where prospects can find you by your service area and specialization. We have people searching for local talent right from the pre-construction, through actual construction to post-construction, home including maintenance and repair.

Tags contractors, homebuyer, homebuyers

Uncategorized

6 Costly Mistakes New Homeowners Make In Canada

Post author By souqh_admin
Post date December 14, 2021
No Comments on 6 Costly Mistakes New Homeowners Make In Canada

The home buying process in Canada can be quite overwhelming for first-time buyers. In the stress of it, many inevitably make mistakes. Costly mistakes. Naturally, this is a popular topic of discussion in real estate circles and a lot of advice is available on how to avoid these mistakes.

But perhaps less highlighted are the mistakes first-time homeowners make in the euphoria of closing what for many is the biggest purchase of their lifetime. The mistakes you make in all the excitement can come back to bite you and can even affect your home’s resale value.

Now that you have been handed the keys to your new home, you should be enthusiastic to start putting your personal stamp on the property. Tread with caution; the mistakes we will highlight below can quickly deflate your enthusiasm and punch a large hole in your pocket:

1. Over-personalizing Renovations

Every new homeowner longs to see themselves when they look at their new homes. The challenge though is your wishes for a home that truly represents your tastes and style can be too far removed from what is practically achievable.

In your attempt to personalize your new home, you may end up overdoing it. Instead of a tasteful modern home, the final result could show a mess of mismatched colours, poorly chosen fixtures, and awkward room layouts.

That would be OK if this is your forever home. As you will realize, though, very few are. Potential homebuyers may find your quirky decor taste entirely unfashionable. So always consider how a potential buyer may perceive the space and avoid being too bold when renovating.

Besides interior designers, the best people to consult on colour selection are professional home painters. Because they have worked on many similar projects before, home painters have a good idea of what colour schemes appeal to most people.

Crucially, unlike interior decorators, painters are more likely to consult for free if you ask politely and especially when they know they’re getting the painting contract. Search Souqh for a curated selection of professional home painters in any city in Canada.

2.Making Major Renovations Too Soon

As a new homeowner, you will have a lot of ideas on what the home must look like. Oftentimes this entails making both cosmetic and structural alterations to the home.

But it’s important not to rush into any major renovation or remodel and give yourself time to settle in and get a full appreciation of the home’s features. This way you will know what you need to prioritize to improve both the efficiency and curb appeal of your new home. You will likely find that a new roof or more energy-efficient windows are a more urgent project than a new bathroom.

So for the first year at least, it may be wiser to focus your budget on smaller repairs. Get a home repair and maintenance professional to come in and access the condition of the home and identify repairs and maintenance areas the previous homeowner may have neglected.

After you have lived in the new home for a while, you will be better acquainted with its features and problem areas and, thus, more prepared to tackle a major renovation or remodel with confidence.

3. Under-budgeting

Another issue you will run into when you plow into a major renovation project too soon after moving into your new house is not budgeting enough money. Because you have not given yourself time to fully acquaint yourself with your new home, there are issues you will only discover after you have already started the project. These are issues you will not have budgeted for.

For example, remodeling the kitchen when the roof above it leaks badly. Whether or not you discover that the roof leaks during or after the kitchen remodel, you have to get it repaired. Otherwise, the leak will ruin the new ceiling, walls, and floors. Needless to say, this throws your budget off, which can derail the entire renovation project.

4. Spending Too Much Money On A Renovation Project

Renovations and remodels are costly and can often run beyond their budget. This is especially true for new homeowners who lack prior renovation experience. The issue here isn’t necessarily that you will run out of money before the project is completed. Rather, the danger is you may spend more than you can recover if you decide or are forced to sell the home.

Spending more than you can recover represents a financial loss. So as a new homeowner, it is important to take a step back and work out how much you will have to spend to bring the house to your desired level of comfort, luxury features, overall efficiency, and curb appeal. Then decide if it is an investment you will be able to recoup.

After all, a house is ultimately worth what someone is willing to pay for it, not how much you have invested in it. Factors like location and the current state of the market all intervene and mean some renovations don’t always guarantee a return.

5. Not Pulling Required Permits

At Souqh, we invest considerable resources in vetting and verifying service providers that list on our platform. We do this to make sure you get the best advice and service in your city. We know how many new homeowners have ended up on the wrong side of planning permission bylaws after trusting the advice of inexperienced and fly-by-night contractors.

One of the common mistakes new homeowners have been misadvised into making is not pulling permits before tackling remodels. Depending on several factors, local bylaws may require you to pull building permits and request planning permission before undertaking certain home renovations projects. Not doing so attracts fines and, in some cases, demolition orders that can ruin you financially.

6. Not Hiring A Professional

Of course, failing to obtain building permits may be entirely your fault. In most cases, it is because you take the DIY route and neglect to check with the local city authority and find out if or not you will need a building permit for your project. In other cases, you simply bite more than you can chew.

That’s not to say there aren’t home renovation projects you can tackle on your own. Many may fall right within your wheelhouse. That said, a professional contractor will do the work faster, more efficiently, and as a result, possibly at a lower cost.

More importantly, you can utilize a professional contractor’s experience and consult with them on issues including building permits, scheduling of the renovation, and where to get cheaper raw materials.

When you work with the contractors in the Souqh database, you can be sure that they will only start work after every necessary permit has been pulled. They do this because their reputations rest on that efficiency and due diligence. Furthermore, you will know that the work will be done right the first time.

[Bonus] Unfinished Renovation Projects

The costliest consequence of biting more than you can chew, under-budgeting, and failing to obtain building permits is that the project may stall. This setback may prove too much to overcome.

When a renovation stalls, not only do you risk the money you had already sunk into the project, but the unfinished home may also become less livable and end up consuming too much energy. The unfinished parts of the house may also become safety hazards.

Simplify Home Ownership With Souqh

Finally opening doors to your first home is a major milestone and achievement for anyone. It feels particularly sweet when you consider all the struggles you went through saving up for the deposit, securing the mortgage loan, and filing all the paperwork you had to submit.

But that can all turn bittersweet if, in your excitement, you make the mistakes we have highlighted above. Fortunately, Souqh has all the contractors you need to create the home of your dreams in one place.

Search Souqh for all the home repair and renovation services you need and enjoy all the benefits of homeownership without spending too much money.

Tags home owners, homebuyers, Real Estate