You may already be familiar with the expression “fix and flip”. Basically, it refers to buying a property, adding value by renovating or updating and selling it for a higher price. If this is the type of real estate investing that you’re interested in, let me answer several common questions you likely have.

How do I choose a property?

As we say in real estate, the most important considerations are always location, location, location! So, decide first on the neighbourhoods you’re interested in. Consider what areas of Calgary are popular where houses sell quickly. Think also about what amenities are nearby in the areas you’re scouting out – such as schools, stores, parks and community centres.

When you’ve found a potential fixer upper, inspect the property closely to see what needs to be done to improve its resale value. Make sure you have the time and resources available to update the property.

What resources do I need?

First, you’re going to need financial resources. Do you have enough of your own funds put aside or will you be applying for a loan or using a line of credit? If you’re going to be borrowing money, consider the interest you’ll be paying until you can resell the property.

Next, decide who’ll you need to help with the actual renovation or upgrade. Even if you plan to do most of the work yourself with the help of a friend or family member, give some thought to whether you have the expertise required. For example, keep in mind that unless you’re going to occupy the home you may need a licensed contractor to do plumbing and electrical work. Make sure you check out the requirements with the city, then factor these expenses into your project.

How much can I expect to make at resale?

There’s a 70 rule in house flipping. It means that you shouldn’t invest more than 70% of what you expect to sell the house for. That 70% includes what you purchase the property for plus what you plan to invest in upgrades.

Certain renovations, such as bathroom, kitchen and landscaping, will add more value than others. Don’t forget that repainting rooms in neutral colours and swapping out dated floor coverings for something new like a rich-coloured laminate, goes a long way to updating the home.

You should aim for at least 20% profit and plan that the work will not take you longer that two or three months. However, take care to build room in the budget for unpredicted expenses and the renovations taking longer than anticipated. Planning for the unexpected is critical.

Fixing and flipping homes is not for every real estate investor. If it’s a business venture that excites you, then I’m more than happy to work closely with you to find that ideal property!