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DAN AND NIKKI HALL REAL ESTATE INVESTMENT FORUM 2011 HOW TO FLIP A HOUSE AND MAKE MONEY PowerPoint Presentation
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DAN AND NIKKI HALL REAL ESTATE INVESTMENT FORUM 2011 HOW TO FLIP A HOUSE AND MAKE MONEY. never as easy as it looks; nothing glamorous about it. WHAT YOU SEE ON TV IS NOT REAL!. REAL RISKS!. People don ’ t line up to sell you their houses at 50% below market value

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slide1

DAN AND NIKKI HALL

REAL ESTATE INVESTMENT FORUM 2011

HOW TO FLIP A HOUSE AND MAKE MONEY

real risks
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
got the stomach
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
the buy
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!!
slide7
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
walk away renee
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
the build
THE BUILD
  • Create something that adds value to the property and use it each time if you can….
slide15

VALUE PROPOSITION?

  • You have to add value to differentiate yourself from the thousands of others doing this
  • Design, but don’t over design
flipping today
FLIPPING TODAY?
  • Skyrocketing purchase prices
  • Higher construction costs
  • Capital gains / HST / Tarion / Homeowner Protection Office (HPO)
slide20

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
slide21

HAVE A CLEAR VISION

Be clear about what you want to accomplish

slide23

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.
slide24

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
slide26

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
slide27

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 %)
slide28

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%)
partnerships agreement
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
slide30

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
slide31

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
slide32

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)
slide33

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 $
slide34

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!
slide35

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
slide37

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