Looking for an investment property to renovate, rent out or flip? Don’t want to buy someone else’s renovations or are you trying to buy a more affordable home? Purchasing a home that needs work can be an opportunity to get into the market. It may seem like an easy task but even those with experience can have issues. Older homes in South Etobicoke are typically built from the early to mid 1900s. There are components of a home that can get costly to repair or remove depending on the age and condition. The systems of a home that are costly to remediate such as foundation, electrical, plumbing, HVAC, and roof are important features of a home that can take a large portion of your budget. Several components of a home that even an experienced real estate investor would avoid if problems are found are foundation leaks and cracks, framing, roof sheathing damp, roof sagging, asbestos removal, etc.

Putting a little sweat equity into a fixer-upper can be a lucrative investment. Here are some points to consider when searching for a home that needs some TLC:

1. Location

You’ve heard this before but location, location, location is important whether you are buying as an investment or your primary residence. Finding a home in the right pocket, with access to good schools, amenities, parks, and a strong community are just some of the important factors when searching for a home.

2. Layout 

Does the floor plan of the home fit all your needs as an individual or family? Do you want open concept, a bungalow or 2 level, walk-in from garage, a backyard? These are all things to look out for depending on your needs, risk tolerance and budget. If you must build an extension or add a new level, then a larger budget and a longer timeline. Are you an investor looking to flip or rent the home to potential buyers or tenants. You may want to consider a home that will attract the largest pool of buyers.

3. Appraisal / Financing 

Banks are tightening the borrowing criteria, you may have to consider the alternative lender solution like private lending, using a line of credit or other unconventional borrowing channels. Reviewing your budget is one of the most important tasks when looking for a fixer upper to ensure you have the funds to complete the project as well as having additional money set aside for unexpected problems.

Learn more about buying a home in South Etobicoke with these blog resources:

4. Construction costs

Every industry has experienced an increase in costs and the home building/renovation market is no different. Manufacturing costs for wood products, supply chain problems, shipping costs and lack of labour are some of the factors to consider. When looking for a contractor ensure you do your research and obtain quotes from multiple resources.

5. Time

With an increase in demand, and a shortage of labour and supplies, projects are taking longer to complete. If you have a tight deadline, buying a fixer upper may not be a suitable option. Also consider the time it takes to obtain proper permits, contractors schedules, unexpected delays due to

6. Misc. Expenses

Where will you live during the renovations or build? If you don’t have the funds to carry 2 properties or have family to live with renting might be your only option. With the rental market so hot, leasing a property can be a costly expense.

7. Tax Implications for Flipping a home

After January 1, 2023, anyone who sells a property that they’ve owned less than 12 months, will be considered to have “flipped” the house and profits will be taxed as profits.

 

Have any questions? Looking to buy a fixer-upper in South Etobicoke? Let’s chat! Call us at (416) 319-6893 today.