Cool housing market puts a freeze on flipping

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With mortgage interest rates and renovation costs on the rise, and housing prices down, flipping houses is more challenging

Real estate flippers have made out like bandits in Canada’s red hot real estate market over the past two years. But with today’s slower sales and house prices dropping rapidly, it’s time for a reckoning.

“Investors don’t know the market as well as we do, because we work with the resale side,” Mr. Cai says. “So, we bridge that gap between the designers, architects, engineers and the market. I can tell them that in this neighbourhood, it’s good to add another bedroom on the second floor, or that according to the last 10 sales, projects with a waterfall staircase worked out really well. That translates into getting the maximum resale value.

Mr. Cai says he expects to see some deals emerge in the next six to 12 months because some homeowners won’t be able to refinance and will be forced to sell. However, anyone wanting to buy right now should look for something that produces an income like a rental property.“If market comes back in the next two years, you can always start renovating and flip it then. The housing supply in Toronto and the GTA is extremely low so I can’t really see how this how the price drop is going to be endless.

However, “some of them might need the equity to do the next property, which might put them on hold for a while, depending on their specific financial situation,” Mr. Francis says. “But if they can put a renter in there for a couple of years until the market starts picking up again, they can sell then and get their profit.”

“I am much more of a proponent of wealth creation for my clients over making a quick buck. Purchase, renovate, refinance, rent and retain. We need people to renovate old houses. That makes our housing stock better and is good for our economy.”

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Tax the sht out of them.

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