House flipping has been a growing trend in the housing industry for the past 15 years, according to some local realtors.
But Charles Ferreira, an agent with HomeLife in Ajax, says it’s not for everyone.
He says flipping, the art of renovating a home and quickly re-selling it for a profit, often results in lost money.
“If you do not know the costs, you may very well run into the risk of losing some money in the next little while,” Ferreira said.
Flipping has become a much more popular thing in recent years, with the spike in HGTV and renovation homes, but viewers don’t see the other side of flipping.
Fahad Rehman is a student at Western University, and is learning about the setbacks involved with flipping a home. At only twenty-years old, Rehman has bought his first house to flip.
The Ajax resident is no stranger to renovations, but hasn’t owned his own home, until now.
Although Rehman is using contractors for his flip, he still understands the work that goes into renovating a home.
“I had basically grown up doing small jobs, renovation jobs at my house,” Rehman said. “Last summer my uncle was looking at selling his place and I sort of proposed him with the idea of me taking that on as a project and sort of doing that whole renovation head-to-toe.”
The renovation costs of Rehman’s project are about $50,000 – $60,000. Rehman has the benefit of knowing his costs, unlike a lot of first-time flippers.
He had to get what’s known as a ‘B’ mortgage because of the banks already strict mortgage rules, which are about the get tougher.
New regulations passed down from the federal government last month are going to make getting a mortgage cost much more than before. Borrowers will need a higher income and a bigger down payment to hit the same qualifying rate from the bank.
Newbies to the flipping game will have to take that into account when considering buying a property. It could be another hurdle to jump for someone who already might be losing money.
Marco Werner lives directly across the street from Rehman’s flip. He says the situation is good for the neighbourhood.
“I think it is a positive thing for the neighbourhood,” Werner said. “It has a couple things of value to add.”
Rehman has learned a thing or two about the housing market through this, and says he will definitely try to do it again.
