DAN AND NIKKI HALL REAL ESTATE INVESTMENT FORUM 2011 HOW TO FLIP A HOUSE AND MAKE MONEY

1. DAN AND NIKKI HALL REAL ESTATE INVESTMENT FORUM 2011 HOW TO FLIP A HOUSE AND MAKE MONEY

2. never as easy as it looks; nothing glamorous about it WHAT YOU SEE ON TV IS NOT REAL!

3. REAL RISKS! • People don’t line up to sell you their houses at 50% below market value • Requires considerable time (double it) and money • The economy is capitulating and who knows the effect that will have on the housing market • You never hit your budget estimates

4. THERE GOES THE BUDGET ESTIMATE!

5. GOT THE STOMACH? • Secure financing BEFORE you look at houses • Banks typically don’t finance construction costs • Choose a specific neighbourhood and stick to it • Line up your trades

6. THE BUY • High margin - low risk?? Dream on.... • Margins typically greater in new builds than renos • Don’t pay for someone else’s renovation. The worse the better!!

7. THE BUY…… • Competition is fierce • Competing with end-users who don’t have to factor profit, RE fees in their offer price • Review comparables, but don’t be fixated by them

8. INSERT PICTURE OF FISHLEIGH *

10. WALK AWAY RENEE... • Unlike most of the rest of the world, Vancouver and Toronto remain hot Real Estate markets • Don’t get caught up in it - stick to your price

11. THE BUILD • Create something that adds value to the property and use it each time if you can….

13. BOXES AND SUCH

15. VALUE PROPOSITION? • You have to add value to differentiate yourself from the thousands of others doing this • Design, but don’t over design

18. FLIPPING TODAY? • Skyrocketing purchase prices • Higher construction costs • Capital gains / HST / Tarion / Homeowner Protection Office (HPO)

19. NOW LET’S GET BUILDING!!

20. CONSTRUCTING YOUR INVESTMENT 101 Create an idea file for design Choose a builder/ contractor Sign a contract that works for you Know your role in construction • Have a clear vision! • Reality Check • Know your soft costs • Know your hard costs • Factors that influence cost • Know where to spend your money • Partnership • Agreements

21. HAVE A CLEAR VISION Be clear about what you want to accomplish

22. PRE/DURING/POST CONSTRUCTION

23. NOT-SO-REALITY TV • Beware - what you see on TV is NOT always real. • Estimates are fluffed to fit the storyline. • Building is stressful – your house will be a mess, it will always cost more than it does on TV. This isn’t television; this is reality, and it’s YOUR reality.

24. KNOW YOUR SOFT COSTS OF CONSTRUCTION • Architectural and engineering • Permitting and planning • Design • Insurance and legal • Carrying costs (heat, hydro, mtg) • Potential furniture display/staging • Real Estate commission • Purchase price (down payment, mtg) • Land transfer • Property taxes • Management fees

25. 5 MAJOR STAGES OF CONSTRUCTION HARD COSTS

26. FACTORS THAT CAN INFLUENCE COST • Level of design – how difficult is it to build • Level of finishes • Revisions to the original plan • Unforeseen site conditions • Duration of construction: Time = Money

27. KNOW WHERE TO SPEND YOUR MONEY TOP 4 ROI POTENTALS • Bathroom renovation (75-100%) • Kitchen renovation ( 75 -100%) • Interior Painting (50 -100 %) • Exterior Painting (50 -100 %)

28. TEN AVERAGE ROI POTENTIALS • Roof shingle replacement (50-80%) • Furnace/heating system (50-80%) • Basement renovation (50-80%) • Recreation room addition (50 -75%) • Installing a fireplace (50 -100 %) • Flooring (50-75%) • Construction a garage (50-75%) • Window/door replacement (50-75%) • Building a deck (50-75%) • Central air conditioning (25-75%)

29. PARTNERSHIPS AGREEMENT • Make sure that all of your partnership agreements are in place prior to purchase or immediately thereafter • Review title searches for all proposed purchases • Eliminate all personal liability as best possible • Always refer to legal counsel

30. CREATE AN IDEA FILE FOR YOUR DREAM HOUSE • Clip ideas from magazines • Search international design blogs • Visit model homes & showrooms • Visit Home and Design Shows • Drive through neighbourhoods • and take pictures • Watch design shows and take notes • Relax with a glass of wine, somegrid paper, a ruler and get creative • with floor plans

31. CHOOSINGA CONTRACTOR • Get multiple bids or quotes - 3 or more bids will give you a rough idea of the going rate for your project • Remember that in the long run, cheaper isn't always better • Get references and actually call on them

32. CHOOSING A CONTRACTOR • Are they businesslike and professional? • Will the contractor be on the site him/herself ? • Are they licensed and insured? • Will they provide a written warranty? • What is their level of experience ? • Get a commitment on timeframe for the duration of construction. • What type of contract are they operating with? • CCDC Canadian Construction Document Committee (built by the Canadian building law)

33. TYPES OF CONTRACTS USED IN CONSTRUCTION • LUMP SUM • Fixed Dollar number • Turn-Key construction process • Less unforeseen conditions (in contract) contractor takes all the risk and total control • COST PLUS • Proposed budget / working budget • Books are open • Owner has option to pay trades directly • Management fee % • Field Supervision $

34. YOUR ROLE IN CONSTRUCTION • Develop a trusting, working relationship with your contractor • Be available during the day to make decisions – this is important not to slow down the process! • Take the time to work through issues with your contractor – there are no problems, only solutions!

35. YOUR ROLE IN CONSTRUCTION • Walk the construction site regularly and ask as many questions as you can. • Be prepared for a lifestyle change throughout the duration of construction. • Make sure to pay your contractor on time – ( We are not banks) • Know your finishes and longlead items

36. KNOW YOUR FINISHES AND LONGLEAD ITEMS

37. TO DOWNLOAD A PDF COPY OF THIS PRESENTATION Visit www.halldevelopments.com Feel free to email us if you have any questions dan@halldevelopments.com nicolehall@rogers.com