TORONTO — Canadian real estate investor and contractor Scott McGillivray will judge four teams competing for the most profitable home renovations on the new series “Flipping the Block.”
The series, which premieres Sunday at 9pm ET/PT on HGTV Canada, sees each team work with the same budget to renovate each unit in a mansion identically. They then auction off each unit, with the winner (the team who sells the mansion for the highest price) taking home the return on their investment and a $50,000 prize.
“There's still a great resale market” in Canada, said McGillivray, who has been flipping properties on and off for 15 years and is the host of the HGTV series “Income Property.”
He offers these five tips for anyone interested in getting into the flipping game:
1. Ask yourself if you are eligible to convert.
McGillivray says many contractors get into the “reselling game” because they know how much it will cost to complete the job and they can do it themselves, and that's the key. If they can't pick up that sledgehammer, they might not be successful.
“The best way to make money flipping property is to do some, if not all, of the work yourself, and the best people to do this are contractors and designers,” he says.
“We have a huge advantage when it comes to flipping real estate because that's what we do for a living. So we can come in and do it at or below cost price and make a huge profit.”
2. Look for properties that are in need of repairs and have the opportunity to grow your equity.
“If it's already been fully renovated, there's no room to add value or boost property values,” says McGillivray, “so the first place you look is for properties that aren't necessarily living up to their potential. The worst house on the best street is a perfect example of this. It's not always going to be that way.”
“Typically they set the trend by buying a reasonably good property on a great street or in an area that's a bit on the rise.”
3. Calculate the expected costs when you first view the property. Then arrange for a contractor to show you around the property and give you a quote before you sign a contract.
“If you try to get everyone together after closing, it's chaos,” said McGillivray, who owns dozens of income properties and will take over HGTV Canada's social media accounts on Sunday.
“When you have 60, 90, 120 days to close, you should be focused on actually doing the work, not planning ahead. That's what preparation is all about. It's all about timing. Plan ahead, and you'll save time, save money and make a profit on the resale.”
4. Once you have acquired the property, start working on it right away.
“The thing to remember when flipping a property is time,” says McGillivray. “Time is the enemy. The longer you hold it, the more it costs to maintain, so there needs to be a great deal of urgency in flipping a property. Demolition work should start on the day the deal closes.”
When it comes to where to start, McGillivray likes to take everything apart on Day 1 and tackle it all at once.
“Someone's bound to be late, so we might as well get on with everything else,” he said.
5. Don't compromise on quality and don't overprice. Today's buyers are smart and savvy, and they'll recognize a problem as soon as they see it.
“There's a big mistake people make when they start flipping property – they think the less money they put in, the more money they'll make, but that's a false misconception because they don't take quality into account,” McGillivray says.
“If you go high and low, you can make more money. If you go low, you're tied to the house. Nobody wants to buy it.”
Another big mistake is pricing your property too high, which can scare off potential buyers.
“It may be worth it, but because so many people search within a particular category, you're basically already cutting out half your users,” he says.
“So don't be greedy. The pig gets fat, the pig gets slaughtered. Sell it for a fair price or a little less, make an offer and sell it fast.”
Follow @VictoriaAhearn on Twitter.