Real Estate

Is it a good to buy beaten up houses in Scarborough, renovate and sell?

  • Last Updated:
  • Apr 4th, 2018 10:13 am
Tags:
[OP]
Sr. Member
Nov 9, 2017
785 posts
100 upvotes

Is it a good to buy beaten up houses in Scarborough, renovate and sell?

Is it a good to buy beaten up houses in Scarborough, renovate and sell?
I am handy, able, and have some renovation experience but very good at Googling things or finding the right contractors.

I like suggestions from those who have faced the beast and can tell me the pay-off percentage and PROS / CONS.

Thanks,
36 replies
Deal Addict
Oct 29, 2010
4321 posts
670 upvotes
I would say the rule of thumb is look at similar houses in the neighborhood that are in better condition or similar to what you hope to achieve with your renovation, that will give you a rough ceiling to what you can sell it for once you are done with it.
So then if the best houses in the same neighborhood are selling for 1M and you can buy a beaten house that is similar in size and structure for say 800k, will you be able to spend 100k and then sell it for 1M and perhaps pocket 100k?
Obviously you have other expenses like closing, realtor, interest on mortgage, taxes if it's not your primary residence etc...
Key is buying low and being able to bring it up to standard for as cheap as possible, so if you can do most of the work yourself it may be possible, if you rely on contractors, it's doomed to fail most likely.
You also need to consider that the market is on a down trend now, it's possible that when you do your research it sells for 1M but when you finish your work in say 6 months, you may lose 50-100k.
Newbie
Jan 19, 2018
61 posts
121 upvotes
I will provide you a proxy.
42 CLIFFCREST DR, Toronto, Ontario M1M2K3
https://www.realtor.ca/Residential/Sing ... Cliffcrest

Bought in the fall for $860,000
Listed last week for $1,250,000
It was a disaster when they bought it.....substantial renovation performed.
No need to speculate, see what happens to this home.

Price and is Scarborough are also quite high outside of Malvern. Similar to prices in Etobicoke outside Rexdale.
Deal Fanatic
User avatar
Sep 8, 2007
9036 posts
10349 upvotes
Way Out of GTA
lydia82 wrote: I will provide you a proxy.
42 CLIFFCREST DR, Toronto, Ontario M1M2K3
https://www.realtor.ca/Residential/Sing ... Cliffcrest

Bought in the fall for $860,000
Listed last week for $1,250,000
It was a disaster when they bought it.....substantial renovation performed.
No need to speculate, see what happens to this home.

Price and is Scarborough are also quite high outside of Malvern. Similar to prices in Etobicoke outside Rexdale.
Still overall, a low budget Reno. They didn't even bother opening up the kitchen...left it such that there's no natural light. Outside is still unappealing.

Much nicer, same area sold in Jan $880k.
https://www.mongohouse.com/soldrecords/ ... 12a1a3984b

I guess people can ask whatever they want though.
Deal Expert
User avatar
Aug 2, 2010
15193 posts
4943 upvotes
Here 'n There
OP just outlined the very reasons they shouldn't buy beaten up homes and renovate them. It's a tough game even for seasoned flippers in a frothy market, which this is fast not becoming.
Deal Addict
User avatar
Nov 4, 2006
2570 posts
142 upvotes
lydia82 wrote: I will provide you a proxy.
42 CLIFFCREST DR, Toronto, Ontario M1M2K3
https://www.realtor.ca/Residential/Sing ... Cliffcrest

Bought in the fall for $860,000
Listed last week for $1,250,000
It was a disaster when they bought it.....substantial renovation performed.
No need to speculate, see what happens to this home.

Price and is Scarborough are also quite high outside of Malvern. Similar to prices in Etobicoke outside Rexdale.
what an overpriced piece of turd.
Deal Fanatic
May 31, 2007
5018 posts
2162 upvotes
Anyone doing Reno right now will tell you materials and construction material, demo cost just keeps going up in high single or double digits . Labour and everything very, very expensive.

Be very careful pricing your Reno even from 5 years ago everything it seems has gone up big time.
Penalty Box
Dec 27, 2013
8003 posts
3989 upvotes
Toronto
With house prices sky rocketing, people have decided to stay put rather than move up to a bigger place. Because of this, the renovation market is out of control. Really hard to find good renovators/contractors that won't rip u off... Then on top of that, finding good workers.....

so because of this reno costs are super high.

probably a really good time to get into the renovation business.... Another 2 to 3 years of this until HELOCs become unattainable for people.
[OP]
Sr. Member
Nov 9, 2017
785 posts
100 upvotes
lydia82 wrote: I will provide you a proxy.
42 CLIFFCREST DR, Toronto, Ontario M1M2K3
https://www.realtor.ca/Residential/Sing ... Cliffcrest

Bought in the fall for $860,000
Listed last week for $1,250,000
It was a disaster when they bought it.....substantial renovation performed.
No need to speculate, see what happens to this home.

Price and is Scarborough are also quite high outside of Malvern. Similar to prices in Etobicoke outside Rexdale.
How much did they spend to renovate?
This didnt sell and is relisted for 1.1 million now.
Deal Addict
User avatar
Sep 16, 2012
3082 posts
325 upvotes
Mississauga
Ive heard so many stories recently of amateur flippers, trying to these kinda moves and not ensuring the work put into homes is good quality.
Deal Expert
User avatar
Aug 2, 2010
15193 posts
4943 upvotes
Here 'n There
snowhite445 wrote: Is it a good to buy beaten up houses in Scarborough, renovate and sell?
I am handy, able, and have some renovation experience but very good at Googling things or finding the right contractors.

I like suggestions from those who have faced the beast and can tell me the pay-off percentage and PROS / CONS.

Thanks,
Pros - you might do well
Cons - most people don't do well

Lots of risk in this market
[OP]
Sr. Member
Nov 9, 2017
785 posts
100 upvotes
olek86 wrote: Ive heard so many stories recently of amateur flippers, trying to these kinda moves and not ensuring the work put into homes is good quality.
can u backup with some examples from listings?
Deal Fanatic
User avatar
Oct 9, 2008
5681 posts
2235 upvotes
Thornhill
lydia82 wrote: I will provide you a proxy.
42 CLIFFCREST DR, Toronto, Ontario M1M2K3
https://www.realtor.ca/Residential/Sing ... Cliffcrest

Bought in the fall for $860,000
Listed last week for $1,250,000
It was a disaster when they bought it.....substantial renovation performed.
No need to speculate, see what happens to this home.

Price and is Scarborough are also quite high outside of Malvern. Similar to prices in Etobicoke outside Rexdale.
No chance in hell the buyer will find someone in this market for the relisted price of $1,100,000. He'll be lucky if he find someone to take it for $900k imo to make break-even at best.

He recently listed it for lease @ $2,800 on 2018-03-19 so his thoughts/prayers on easy 2017 flipping dreams are gone. He took over 5 months to do very minor renovations and bought at the top anyways, signs of a poor real estate investor.

https://www.realtor.ca/Residential/Sing ... Cliffcrest
Deal Guru
User avatar
Sep 1, 2005
13262 posts
7988 upvotes
Markham
I'd like to see some people get sued when they do stuff they shouldn't do. They need to show people who venture into this stuff to be aware that they're playing with people's lives and that there is a duty of care to be upheld.

Amateur flippers watching HGTV do stuff they shouldn't is scary and the reason some people should be very careful buying cosmetically put together houses. If you see a listing with a history like that, stay away. You can't see behind the walls!
We're all bozos on the bus until we find a way to express ourselves...

Failure is always an option...just not the preferred one!
Deal Fanatic
User avatar
Jul 19, 2003
8112 posts
743 upvotes
Jeenyus1 wrote: No chance in hell the buyer will find someone in this market for the relisted price of $1,100,000. He'll be lucky if he find someone to take it for $900k imo to make break-even at best.

He recently listed it for lease @ $2,800 on 2018-03-19 so his thoughts/prayers on easy 2017 flipping dreams are gone. He took over 5 months to do very minor renovations and bought at the top anyways, signs of a poor real estate investor.

https://www.realtor.ca/Residential/Sing ... Cliffcrest
really cheap material all the way around, and poor colour scheme with the paint
hi!
[OP]
Sr. Member
Nov 9, 2017
785 posts
100 upvotes
Jeenyus1 wrote: No chance in hell the buyer will find someone in this market for the relisted price of $1,100,000. He'll be lucky if he find someone to take it for $900k imo to make break-even at best.

He recently listed it for lease @ $2,800 on 2018-03-19 so his thoughts/prayers on easy 2017 flipping dreams are gone. He took over 5 months to do very minor renovations and bought at the top anyways, signs of a poor real estate investor.

https://www.realtor.ca/Residential/Sing ... Cliffcrest
So it sounds like he hit bad timing. But also sounds like house or land price is now eating renovation portion as in it's more expensive to renovate and more expensive to buy but less buyers there for renovated houses.

What is a fair expectation of flipping one should make in $ percentage?

What is the shortest amount of time one can get out a house and renovate? (Let's say no utility or city service need to be reconnected and they stay the same). People claim they can do it in 3 months. True?
Deal Fanatic
User avatar
Oct 9, 2008
5681 posts
2235 upvotes
Thornhill
snowhite445 wrote: So it sounds like he hit bad timing. But also sounds like house or land price is now eating renovation portion as in it's more expensive to renovate and more expensive to buy but less buyers there for renovated houses.

What is a fair expectation of flipping one should make in $ percentage?

What is the shortest amount of time one can get out a house and renovate? (Let's say no utility or city service need to be reconnected and they stay the same). People claim they can do it in 3 months. True?
Buyer originally purchased in April 2017 for $840K. Judging from the original listing pictures vs. latest listing pictures, all that I can see that has been reno'd is pretty standard in line with the area with no changes to layout but I'm uncertain if any of the big ticket items ie: electrical, plumbing or HVAC has been done at all. We also can't see the pool at all because it's tarped and covered with snow but I;m assuming it hasn't been touched at all maybe except a new liner. Houses is that area are not that old so I doubt electrical/plumbing needed to be done anyways.

Based on those assumptions and looking at pictures, they used standard finishes throughout w/ exception to flooring which is listed as hardwood. Assuming the work was completed by subbing out to subcontractors they're 100% underwater if they sold at anything less than $980-$1M+. If the owner did all of the work themselves except maybe potlights installation than their all in cost would likely be closer to $70K-100k put into the home for total of $910k - $940k.

'Fair expectation' of ROI is wholly dependent on margin vs comps in area. There is none left for buyer except reasonably break-even at best imo because of the poor execution by investor, thus why it's up for lease now. Their only option for the investor at this time other than a write-off is to wait for housing climb back up to past 2017 levels until then.

For all the work that's gone into the house if subbed out should have taken around 2 months at max if you had a list of contractors on hand and were able to manage them effectively but 3 months is not bad. They took 5 months which is on the slower end so they either did not manage their subcontractors effectively or they could have possibly done the work themselves.
Deal Guru
Feb 9, 2009
11257 posts
9748 upvotes
some parts of gta is still probably profitable to flip, especially with the price decrease in detached. i dont know if scarborough is one of those areas though... north york has some gems to make big money in flipping if you find the right one...but your likely to have builders who already have found a way to buy before too many people know...
Banned
User avatar
May 12, 2004
9759 posts
4118 upvotes
Ottawa
masterhapposai wrote: really cheap material all the way around, and poor colour scheme with the paint
What? Not a fan of 3-1/2" baseboards, misused track lighting in bathrooms and carpet in a 1.25mil house? Face With Tears Of Joy someone ran out of mooon-ay partway through...
Censorship is telling a man he can't have a steak just because a baby can't chew it.
- Mark Twain
Member
Mar 6, 2017
382 posts
259 upvotes
Jeenyus1 wrote: Buyer originally purchased in April 2017 for $840K. Judging from the original listing pictures vs. latest listing pictures, all that I can see that has been reno'd is pretty standard in line with the area with no changes to layout but I'm uncertain if any of the big ticket items ie: electrical, plumbing or HVAC has been done at all. We also can't see the pool at all because it's tarped and covered with snow but I;m assuming it hasn't been touched at all maybe except a new liner. Houses is that area are not that old so I doubt electrical/plumbing needed to be done anyways.

Based on those assumptions and looking at pictures, they used standard finishes throughout w/ exception to flooring which is listed as hardwood. Assuming the work was completed by subbing out to subcontractors they're 100% underwater if they sold at anything less than $980-$1M+. If the owner did all of the work themselves except maybe potlights installation than their all in cost would likely be closer to $70K-100k put into the home for total of $910k - $940k.

'Fair expectation' of ROI is wholly dependent on margin vs comps in area. There is none left for buyer except reasonably break-even at best imo because of the poor execution by investor, thus why it's up for lease now. Their only option for the investor at this time other than a write-off is to wait for housing climb back up to past 2017 levels until then.

For all the work that's gone into the house if subbed out should have taken around 2 months at max if you had a list of contractors on hand and were able to manage them effectively but 3 months is not bad. They took 5 months which is on the slower end so they either did not manage their subcontractors effectively or they could have possibly done the work themselves.
Land Transfer Tax alone on that property was 25-30k and commissions will be around 30-50k if he sells. plus the taxes are about $4000 so $300 per month for the 5 months it took to finish the job and each month its vacant and listed and if there's a mortgage... god help this person

I think even 1.1 million they're barely making anything

Top