Flipping Houses in Calgary
What Is House Flipping?
House flipping is when you purchase a home with the intention of renovating it and then selling it right away. The idea is that you buy a house that is cheaper because it needs to be renovated (maybe it’s outdated or in need of repair).
You buy a cheaper house, fix it up, and then sell it for more than you bought it for. It’s a good idea in theory, but there are definitely risks involved. Before you decide to flip a house, you need to think about the housing market, interest rates, mortgage, and more.
Is Calgary a Good City for House Flipping?
Yes, Calgary can be a good city for house flipping. The premise of house flipping is that you buy low and sell high, so if you get the right price, you can house flip anywhere, including Calgary.
While Calgary isn’t Canada’s largest city, it’s still a very desirable place to live. Calgary is ranked the 3rd most liveable city in the world, and it’s population is expected to grow by 110,000 people by 2027.
Calgary’s housing prices aren’t as inflated as other Canadian cities, like Vancouver and Toronto, which makes it desirable to property investors and homeowners alike.
Ultimately, the housing market and desirability can make Calgary good for house flipping, but there are still risks to evaluate before you decide to flip a house.
Is House Flipping Risky?
Yes, there is an inherent risk to house flipping. People have made a lot of money house flipping, but people have lost a lot of money too. The safest way to earn money in real estate is to buy a property and own it long-term.
If you hold onto your house for at least 10 years, that’s generally a safe investment. House flipping is short-term, usually 3-6 months, which is not enough time to expect housing prices to increase significantly.
Instead, you’re counting on being able to resell the house for more than you bought it for, plus expenses, based solely on the upgrades you have made.
Renovations are definitely able to increase the value of a home, but they also often take longer and cost more money than expected. And don’t forget the mortgage payments you’ll need to make for as long as the renovations take.
If you budget the renovations incorrectly or the market changes (just think of any house flippers who bought a house in February 2020), then you run the risk of losing money.
What Should You Know Before Flipping a House?
Before making any investment, it’s important to assess your risk tolerance. House flipping can be risky; are you prepared to lose money? How much money can you afford to lose? These are questions you should be able to answer before your flip. In addition to knowing your risk tolerance, it’s also important to know:
- Information about the neighbourhood
- The current and projected housing market
- What is a reasonable price to pay for the house
- Your renovation abilities
Like any house purchase, you should also be pre-approved for a mortgage before you start looking for a house to flip. That way, you know what houses are in your budget.
Mortgages for House Flipping
Your mortgage for flipping a house will be different than a traditional mortgage for a house you live in. It’s important to work with a mortgage broker who’s familiar with house flipping in order to get the right mortgage.
For more information about house flipping and mortgages, contact us. We’ve worked with countless investors before, so we can help you navigate the ins and outs of your house flip mortgage.
