The Unbelievable Truth About Flipping Houses In Vancouver and Toronto

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The Unbelievable Truth About Flipping Houses In Vancouver and Toronto

A month ago I had the pleasure to participate in one of the “Flipping Houses in Vancouver” seminars that have been flooding Vancouver lately. When I first got the invite for the 3-hour session, I was quite suspicious. The organizers promised to reveal where and what to buy, how to do it and how to finance a successful flip in the major cities of Canada, like Vancouver and Toronto.

To those unfamiliar with the field and method, ‘flipping’ houses is a business venture, where the “flippers”, people like you and I, invest or borrow money to purchase a house at a deal price, the lowest they can find, with the greatest potential for positive revenue once sold. Usually the houses targeted are those who need slight to medium scale renovation in order to appeal to buyers in the market, who will spend much more for the newer house. The focus is in beautifying the original house in a very short time frame and re-entering the real-estate market for a fast, successful sale. The revenue coming from the flip will serve as an income source, as well as the down payment for the next property.
The flip carries a few major risks: Firstly, it’s success depends on the ability to locate ‘real finds’, with a high resale value potential for a low cost. Secondly, it’s mandatory to find a very low-cost mortgage to finance it. Otherwise, the cost of borrowing the money will eat up the revenue. Lastly, everything depends on doing a very fast and focused renovation with a quick sale.
When I came across the increasing number of “Flipping Houses in Vancouver or Toronto” seminars I was quite skeptical.

In the short survey conducted by the speakers at the beginning of this seminar, out of 180 people in the room, most were looking for an easy income. 90% of them did not have their own down payment, did not have any understanding in finance, nor any knowledge or experience in real estate.
Since I deal with the financial side of buying real estate in both cities on a daily basis, it was easy for me to notice the gaps. Every day, I see the neighborhoods that rise in value and those that go down. I talk to small entrepreneurs who struggle to lead a successful story of “Flipping Houses in Vancouver” . It’s also a fact that most middle class families find housing in Vancouver, and now in Toronto, borderline unaffordable.

Those of my clients who choose to flip their house get a full description of the process containing every phase and the associated cost from me. This way they are able to make a decision, to judge the success potential by the risk level, the supply of potential houses, and the funds they have from their own resources. The projection we prepare for them helps them asses the move: will they gain any profit, or will they end up at a loss? An entrepreneur that works with us will start the process only after he has a suitable financial arrangement that secures him the needed time for action in a minimal cost.

Even in the first half hour of the seminar, it was evident that the photos and numbers discussed had slim relation to properties in Vancouver or in other major Canadian cities. After 40 minutes, it was clear the presenters, who came from the US, were there to sell the US, and did not have much about the “secrets of the local market”. Vancouver was only used as a reference when selling housing in Florida and Arizona. The presenters were saying things such as, “Since it’s almost unaffordable to purchase detached housing in Greater Vancouver and carry on a successful flip, I bet you would like to hear more about the money you can make in Florida…” soon enough a seminar of “ Flipping Houses in Vancouver ” turned to a discussion about Arizona and Florida, where the presenters showed an impressive amount of knowledge.

What should you take away from this experience? First, be aware! These “free of charge” 3-hour seminars aim to sell you the next 2-day seminar at a cost of $2000. Second, these seminars offer a method to flip in the US in areas unknown to us, with no way for us to validate the price. Third, the deals they offer don’t include any renovations. The presenters claim to have a great ability in locating low cost finds and immediate sale of those with a revenue margin of 20-30K. A short analysis of the numbers shows that most of the profit goes to them as process managers. They act as leaders of the process, buying and selling agents as well as the financial institution that lends the money. Shortly, you will find that while the risk and purchase are in your name, the revenue goes to them. In the worst case scenario, if the house takes time to sell, or won’t sell at all, you’ll be the one stuck with an exceptionally high rate mortgage that you got from… Yes, from the “experts flipping houses in Vancouver ”.

So next time you are told about the “unbelievable truth about flipping houses in Vancouver”, check your sources, as it might really be unbelievable.

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