I haven’t seen the trend start just yet, but I’m sure it’s coming. When the market goes through a strong upswing in value, as it has started doing this year, a situation is created where flipping houses starts to become a viable money making plan…
Nearly everyone has spent some time watching those house flipping shows on TV so some feel they have gained useful knowledge from it. I’m not going to say that learning useful things from such shows isn’t possible, but I will say that it’s really hard to separate the wheat from the chaff. There is some good info there but also a lot of fluff that is there for the purpose of creating an entertaining narrative with the goal of good ratings. These shows are there to get people to watch them, period. It is easy to forget that they are not getting more viewers by presenting honest, thoughtful, realistic perspectives and advice, but by being entertaining first and foremost. If there is a reality TV show about whatever your profession might be, perhaps you get where I am coming from.
Speaking as someone who has seen success and failure and the grey areas in between with regards to house flips, I believe I have managed to identify key areas of knowledge that should be covered to maximize your chances of success. It goes without saying, or at least it should, that there is a pretty big financial risk taken when flipping a home and there are a lot of things to take into account and balance in order to make it work. If it does work, however, you might just end up retiring early.
The way I see it, you’ll want to make sure you have a solid grasp of all three of the following areas in addition to having professional level knowledge, or close to it, in one of them.
Guidance in the other areas you are less familiar with can be gained by choosing the right professionals:
Financial: People such as Mortgage Brokers and Financial Advisors are the ones to talk to. If you are not some sort of financial professional you should be talking to those who are to make sure all your ducks are in a row financially before getting started. Were I to try a flip, I would be talking to these professionals too. As a Realtor, I have a solid grounding in the basics but the financial pros have a way of surprising me with clever, useful, tricks no matter how much I think I have already learned from them.
Real Estate Markets: Yours truly would be the one to talk to about whether the market timing is right for this. Understand that there are no guarantees exactly how long prices will go up and how much they will go up by. Anyone telling you that there is a guarantee of either up or down on the way, is someone you should stay far, far away from. On one end of the spectrum we have that kind of Realtor who will say whatever nonsense to push you to buy or sell a property, and on the other we have the constant prediction of an apocalyptic real estate market crash coming from a media outlet. They know drama sells papers and gets viewers. Stay away from both.
There is some solace in knowing what the historical pattern has been though. You get about 6 or 7 years or up and about 6 or 7 years of down/not going much anywhere.
The good news is that if you don’t get the flip done before the markets stop going up there is a plan b that should work if you haven’t already over extended yourself financially. That being, rent it out until things start to go up again or better yet, rent it out for longer and make more money. My general recommendation is that you plan to be able to hold on to a property for 5-10 years as your plan B, and in this case we are likely talking about renting it utnil market conditions come back. It’s a pretty safe bet if you are patient and have done your financial homework.
But it’s not all just about timing. You’ll also want to know about what’s popular in the market these days, what are some good ways to easily add value to a given property, knowing which properties are being overlooked by the market and why which could turn out to be a big money maker for you. There is much more to explore here but you get the idea. All of these things combine to tell you what kind of property to be looking for at what price and how you should renovate it to maximize your payback.
Building/renovation: It’s one thing to know that something needs to be fixed, repaired or updated. It’s another thing to know what is involved in doing it. It’s yet another thing to be able to do that work properly. And oh boy, have I seen a lot of people cost themselves a lot of money by cutting corners on this stuff.
As a Realtor, I would say I am pretty comfortable with the knowing what needs to be fixed and what is involved in doing it. I spend my looking at houses every day and deciding what their value is and what would be required to bring out their potential. However, I am not going to pretend, even for one minute that this is the same thing as being able to actually do all that work myself. There are finer details in any job that, although typically simple, only someone with hands on experience knows about. I would suggest that if you are working on the property yourself that you have more handyman knowledge than I or at least are honest with yourself about what your limits are in terms of skill and what the costs are going to be.
If I had to pick one of the three areas of knowledge as the best bet for making money off of a flip, it’s going to be reno/building knowledge. The reason being that it’s the one that allows you to cut costs the most without raising much extra risk. By doing much or most of that work yourself, you’re saving on the most expensive part of the process, which is labour. You can also make sure that the work is done properly assuming your knowledge level is high enough.
And that my my starter kit for house flipping. For the full package and walkthrough you’ll of course have to contact myself and whichever of the other kinds of professionals mentioned above that you’ll need services from. If you don’t have any in mind, I certainly have connections and can give you some leads on people who might just be the right fit.
It was announced this morning that Coast Realty has been bought by Royal LePage and that myself and whichever other Realtors who wish to stay will be flying the red and white banner of Royal Lepage instead of the blue and green of Coast Realty. For my clients, the only noticeable difference will be that my signs, websites and business cards will soon have a different logo on them.
For me, it will mean that I talk to a new manager when I need to and I have to change my advertising to match the new company name. I’ll still be sitting at the same desk, in the same building, selling properties in the same neighbourhoods in the same way as I always have. Apparently being part of a larger national network gives me access to some larger networking and technical resources, but none of this is the sort of thing that would be noticed by the client. I merely mention it because I want my clients to understand that I am the same Realtor I have always been and my business style will remain the same transparent, honest and diligent style it has always been. The change of company is mainly a change of colours like new paint on a home.
Being someone who grew up on a relatively small, 5 acre, hobby farm, I have a certain affinity with rural properties. Unlike most neighbourhoods rural properties generally allow you to make as much noise as you want and indulge in whatever crazy hobby you have without annoying neighbours. The trade off is that you end up being a bit farther away from amenities.
Nanaimo isn’t really all that big. You can get a rural property without having to drive insane distances to get to work, friends places or shopping like you would living in a rural area outside a city. I’ve yet to find one part of town that is more than twenty minutes from any other part of the broader Nanaimo area. If, for example, I am coming from somewhere in Cedar and need to go to the north end of town it’s still going to fit in that time frame because the parkway lets me bypass enough lights and traffic so that it’s doable. Shopping is dispersed throughout the area so even ten minutes would be a long drive for groceries. One can generally expect closer to five.
Although there are varying densities of neighbourhoods within the ‘sub areas’ on the Nanaimo MLS map there are certainly sub areas which are my go to if I have a client looking for rural properties. Cedar, Extension, Chase River, and Upper Lantzville are first to check but I may also look at lot sized and other factors. It’s not cut and dried where they are. This is why although the computer is a great tool for searching, a human mind that knows the ins and outs (like this Realtor guy named Ryan Coffey) can help you hone in on what you are looking for.
A house on a rural lot is in most ways the same as a house that is located in town. Some differences are obvious like the location and lot size. There’s also the more subtle things that you probably won’t notice right away because they don’t affect how you go about your daily life. Those things being wells and septic. They are worth considering because they do affect how you maintain the property and plan your finances. Rural properties will typically be on a septic system and might also be on a well. Both should be inspected and need specialized inspectors in addition to the home inspector you will want to have inspecting any home you buy. Septic systems have a long life of about 25 years but they are an expensive replacement at $20-30k. (There are cheaper quotes sometimes but I like to work with slightly pessimistic numbers.) They also need to be pumped out/maintained every three years or so. My observation has been that taxes on properties that don’t have the public sewage service is lower and to the point that if someone is forward thinking they can put the money they save on taxes away and save up for that new septic system that will need to be replaced someday. Wells are cheaper to maintain but need to have an eye kept on them for water quality/sanitation and to make sure there is adequate supply.
Rural areas have very different building codes/zoning bylaws from in the city. You’ll have to of course abide by whatever bylaws are in place but from what I have seen there is typically more freedom than within city limits in terms of what sort of home/buildings you want to erect.
If you want a big hunk of land for less, a good trick is to look for ALR land (Agricultural
Land Reserve). This is because it cannot be subdivided as it is set aside by the provincial government so that if needed it can be used for farming someday. This is the result of a program that was set up in the 70’s when there were big scares about world food supply. There aren’t many at a time but once in a while I see big acreages at prices that are unobtainable without the ALR restriction.
I’ve not been putting posts up lately because the market has kept me busy and I’m currently writing all the content for my Nanaimo real estate website which will soon be revamped. After that, this website will get a facelift as well.
I just came across this great video that explains why Japanese bathrooms are so awesome. As someone who lived in Japan for four years and as a Realtor this strikes a chord with me. The Japanese way of bathing is one of the main things I miss while I am in Canada. Don’t get me wrong, I’m way happier here and that’s way I came back but I hope to make a bathroom like this in my own home one day as I find this way so much more convenient and comfortable. Only, as we have so much more space in Nanaimo, it will be more roomy.
She doesn’t mention quite everything is this video though. A lot of the mirrors have a heating system that prevents them from fogging and then there’s the toilet seats which look like they’re made by NASA. But those are probably worth a video on their own. This girl does a variety of videos on daily life in Japan if you have further interest.
The west coast, especially Vancouver Island, has long been a favourite place for Canadians to retire. The natural beauty, relaxed lifestyle and the mild winters are a big draw for people across the country who have reached the retirement stage of their lives. Here are some of the points which experience has taught me to believe is of interest to those who are considering retiring to Nanaimo:
I would imagine this is the first thing people from elsewhere in Canada hear about that piques their interest. I was born and raised out this way but have spent a handful of winters in places like Alberta and Nova Scotia. During my travels I was quite surprised that so few people had any idea what it was like in my end of the country. I kept telling them tales of winters where most people didn’t change their tires, or own chains or have any idea how to operate a snow blower. I also talked of mountains covered with giant trees that lie next to oceans full of giant salmon. A multicultural part of the nation that is not Toronto. From the looks I often got, you would think I was from some far of exotic country and not from the same nation as they.
As for the anecdotes that describe the real experience, well saying “At least you don’t have to shovel it.” is only the beginning. You don’t have to dig your car out, worry about frostbite, use remote start to warm up your car, have exorbitant heating costs, put on and take off layers upon layers of clothing every time you go in or out and you are very unlikely to get soaked socks from pools of melted snow that lie next to the front door where you take your boots off. To be succinct, it’s as if it becomes a rainy fall that is still quite green due to all the conifers. The weather gets stuck in that mode, with only the odd snowy or icy day until the spring arrives. Then, our summers are great because it’s neither super hot or very humid, just pleasant.
Easy access to everything:
Nanaimo is plenty big enough to have everything you need for your daily life, it’s not so big however that you feel like you are in a city that is too large to feel part of a community. Due to its central location, it is a shopping destination for people all over Vancouver Island and the main gateway to the mainland via the ferries. There is also the airport and float planes which will quickly take you to Vancouver, Edmonton, Calgary and Seattle via direct flights. From those places you might want to transfer to another plane which will take you anywhere you might want to go.
If it’s bright lights and big city you crave once in a while, Vancouver is just across the water but the advantages are that our real estate prices and commute times are a fraction of what is over there and the social ills associated with that reality are toned down. Conversely, living on Vancouver Island is quieter and comes with a slower pace of life. If you want nature, it’s never far. There are plenty of beautiful parks within Nanaimo and wilderness is just beyond.
Caters to Seniors:
One of the benefits of being in an area where seniors have long been around in numbers is that there are many services, social groups and activities that cater to them. Strata complexes that have an age restriction of 55+ are fairly common and tend to be in good areas.
Access to Natural Beauty:
I once had a retiree client who referred to living on Vancouver Island as like “being in a giant park, except you get you live in it.” Whether it’s boating in the ocean, looking at the ocean, walking in the forest, seeing vistas of the forest, or having wildlife in the background of your daily life Nanaimo has it locally. In fact it’s possible to have them right on your door step if you so choose.
Here is another installment of a recent interview I did with Nanaimo Mortgage Broker Brad Rembold. In this video we discuss strategies for first time Buyers. If you are currently renting and unsure of the benefits of home ownership, you may also enjoy this post along with many others in the Buying section of this blog.
For an intro to this series on Nanaimo’s neighbourhoods, please see the first post of the series, here.
There are a lot of great homes in and around the Departure Bay area. I’ve already talked about nearby Cilaire in an earlier post, which by contrast has an easy to define geographic location and name that the locals know it by. This map isn’t of official boundaries so much as it is of what I have observed from seeing the age and style of the homes and landscape over the years.
Most of the homes in this area were built in the 60’s and a few in the 70’s but the whole thing started in the 50’s. This area is anything but cookie cutter. Some of them are of outside of the box modern designs, some are westcoast contemporary and there are many homes which are of more typical formats of the day. Overall, they tend to be decent builds. There are a wide variety of sizes and styles of build from that era and the mix of sloping and not so sloping landscapes with many different sizes of lots make for another layer of potential uniqueness for each property. Many homes here have an ocean view and one of the perks is that the source of that view, Departure Bay and the beach that surrounds it, are only a few minutes walk away.
Something I often tell clients while we are driving through this area is that I once had a phone call from someone who wanted to sell their house in this neighbourhood. They had lived there for quite a few years but their house had become too big for them and the garden too much work to deal with as they were getting on in years. But, they loved the neighbourhood and wanted to buy another house in the same area or better yet, on the same street. Two weeks later, I got the exact same kind of call from someone else on the same street. It speaks volumes of how good of a spot it is to live in, especially since those are the only two requests like that I’ve ever gotten in my nine years in this business.
It’s an easy walk to a nearby mall known as Brooks Landing. You can walk down Departure Bay Road and find access to beaches and walking trails. You could even walk or bike to the ferry terminal if you wanted to and go to the mainland as a foot passenger which everyone out here knows is much cheaper than taking a car.
Nearby parks include Beach Estates park, which is pretty much a Nanaimo secret. It’s a path that goes down a gulley behind Cilaire Elementary and makes its way down to a spot of beach next to the ferry dock. The whole time walking down there you can’t believe you are in the middle of town. Old growth trees and only a few buildings can be glimpsed all the way down before suddenly arriving at a beach and there’s those giant boats that are so familiar to anyone from Vancouver Island. Walking north along Departure Bay Road, is what most would refer to as Departure Bay beach. Lots of space for taking yourself, your dog, or your kids for a run.
It’s so common that we have a word for it. Catching someone on it and proving that it was done is hard to do because the nature of pricing is that it is very interpretive.
A Realtor is in a state of constant competition for clients. In order to attract clients there are many kinds of strategies that one can employ. Some methods work better than others, some require more effort than others and some are more ethical than others. As in so many kinds of approaches to business, politics and just generally getting people to like you, a common strategy is to tell people things that make them feel good. A little flattery, and a dash of hope go a long way.
Clients do not know the ins and outs of real estate like Realtors do and that is after all the larger part of why they are hiring our services. What clients do know is that they have put a lot of time, money and love into their homes. To them, it’s much more than a big expensive box in which they sleep and keep their stuff. After all, the word ‘home’ is full of warm, happy, cozy nuance that I would imagine people from all corners of the world share. And in the context of life’s major financial transactions, homes are the ultimate big ticket item.
So, a Realtor with the standard package of real estate knowledge meeting a Seller with the standard package of hopes and dreams can, and fairly often does, tell them exactly what they want to hear. They can use it again and again with many different people. Not all will bite, but many will. Said Realtor can say that they can sell the home for more than the other guys or at least at a price that is pure flattery. It’s easy to convince people that something is true when they want it to be true.
There is a saying that some Realtors adhere to: “You can’t sell the listing you don’t have.” I’ve also heard “You can’t reduce the listing you don’t have.” The point being that from the (ethically grey) Realtor’s perspective, it is more profitable to have a listing that can be put up now and reduce to a sellable price later on than it is to have no listing at all. If they can hold on to that listing long enough for it to be reduced to a sellable price, then they will make money directly off the selling of the listing. If it never sells, then they still get the benefit of the various kinds of advertising that come from having a listing, not the least of which is the potential for Buyers who ask about the listing and then buy something else that is more reasonably priced. By then, the value of the property has been reduced, a pattern which I’ve written about extensively on this blog because it saddens me. Whether the Seller realizes it or not, they have been taken advantage of.
I’ve long hoped that I would gain a loyal following by being the Realtor who speaks plainly and honestly enough so that people understand there is integrity in my business style. Some people recognize that, but then again some people use me for a bit and then use some other Realtor who puts more effort into selling themselves than the home itself.
Once in a while I take a break from being serious on this blog and put up something fun. This made me laugh and I thought it might make you laugh too. As the person who posted the video on youtube said, “Always wear your PPE.”