Real Estate

Pre-construction flippers - share your stories

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[OP]
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Sep 8, 2007
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Way Out of GTA

Pre-construction flippers - share your stories

Would be interested to know your experiences.

- how many you've done?
- what do you tend to make net of expenses?
- is it easier or harder to do it this year?
- areas of focus?
- wait times to get a lot/house?
- any concerns about risk if can't sell? Or view as a cant lose strategy?
- how do you find buyers? Do you pay a commission?
- easier to flip low price vs higher priced units?
- did you get into this because stock market stalled?
- do you have friends and relatives doing it also?

In Durham I'd hazard a growing % of new construction are flip or investment rental buyers in what was a much cheaper area a year ago...so would be intreesting to know.
15 replies
Temp. Banned
Aug 7, 2011
6623 posts
991 upvotes
Vaughan
I've done two so far this year.

First was a gross of $50,000 profit plus deposit back (5% of purchase), after commissions, it was about $39,000 profit. Capital gains might take off $7,000. So clearing $32,000. Held it for two years.

Second was a gross of $35,000 plus deposit back. Commissions was only 1%, my take was $32,000. No capital gains. Held it for two years.

Both were condos.

Bought one two weeks ago, holding it for a year or so, and will probably sell next May. We'll see what I can get for it. Looking for more.

Edit: I'll answer the questions:

- how many you've done? 4.
- what do you tend to make net of expenses? $30-$50,000.
- is it easier or harder to do it this year? No difference.
- areas of focus? Vaughan. Stay away.
- wait times to get a lot/house? Condo, 2-3 years for it to be built. Or if you mean wait times for buying, none at all.
- any concerns about risk if can't sell? Or view as a cant lose strategy? View it as can't lose, but I'm setup for the risk in case it doesn't sell.
- how do you find buyers? Do you pay a commission? My realtor. She takes 1%. I buy the condos from here as she sells them from the builder, she sells them for me after. Win win.
- easier to flip low price vs higher priced units? Low priced, definitely.
- did you get into this because stock market stalled? No. Got into it because it makes me more money than anything else, including stock market. 250% return on my deposit, and 200% return on my deposit is insane.
- do you have friends and relatives doing it also? Yup.
Sr. Member
Aug 24, 2006
660 posts
104 upvotes
Scarborough
squadz wrote: - how do you find buyers? Do you pay a commission? My realtor. She takes 1%. I buy the condos from here as she sells them from the builder, she sells them for me after. Win win.



Good info.

Have you considered buying directly from the builder to avoid the 4-6% markup due to agent commissions they pay?
Deal Addict
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Mar 14, 2006
4373 posts
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ahlavanthan wrote: Good info.

Have you considered buying directly from the builder to avoid the 4-6% markup due to agent commissions they pay?
sometimes agent/broker locked in on the units, only they can resell it. builders YMMV
Temp. Banned
Aug 7, 2011
6623 posts
991 upvotes
Vaughan
ahlavanthan wrote: Good info.

Have you considered buying directly from the builder to avoid the 4-6% markup due to agent commissions they pay?
No difference. She doesn't have a markup on her condos compared to the builder (I know the builders as well).
Deal Addict
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Feb 1, 2009
3690 posts
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Toronto
squadz wrote: I've done two so far this year.

First was a gross of $50,000 profit plus deposit back (5% of purchase), after commissions, it was about $39,000 profit. Capital gains might take off $7,000. So clearing $32,000. Held it for two years.

Second was a gross of $35,000 plus deposit back. Commissions was only 1%, my take was $32,000. No capital gains. Held it for two years.

Both were condos.

Bought one two weeks ago, holding it for a year or so, and will probably sell next May. We'll see what I can get for it. Looking for more.

Edit: I'll answer the questions:

- how many you've done? 4.
- what do you tend to make net of expenses? $30-$50,000.
- is it easier or harder to do it this year? No difference.
- areas of focus? Vaughan. Stay away.
- wait times to get a lot/house? Condo, 2-3 years for it to be built. Or if you mean wait times for buying, none at all.
- any concerns about risk if can't sell? Or view as a cant lose strategy? View it as can't lose, but I'm setup for the risk in case it doesn't sell.
- how do you find buyers? Do you pay a commission? My realtor. She takes 1%. I buy the condos from here as she sells them from the builder, she sells them for me after. Win win.
- easier to flip low price vs higher priced units? Low priced, definitely.
- did you get into this because stock market stalled? No. Got into it because it makes me more money than anything else, including stock market. 250% return on my deposit, and 200% return on my deposit is insane.
- do you have friends and relatives doing it also? Yup.
Thanks for sharing, did you get help from family starting out or did you do it on your own?
Temp. Banned
Aug 7, 2011
6623 posts
991 upvotes
Vaughan
redkulat wrote: Thanks for sharing, did you get help from family starting out or did you do it on your own?
Nope, on my own. I've been working since 18, skipped university/college as I didn't want/need it.

The deposits were really not much in comparison. $16,250 + $12,850.
[OP]
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Sep 8, 2007
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Way Out of GTA
Good for you squadz. Not everyone has the confidence or willing to do the work to execute that strategy.

I'm definitely more cautious than you. But it is interesting hearing how it played out and the details.
Temp. Banned
Aug 7, 2011
6623 posts
991 upvotes
Vaughan
cartfan123 wrote: Good for you squadz. Not everyone has the confidence or willing to do the work to execute that strategy.

I'm definitely more cautious than you. But it is interesting hearing how it played out and the details.
Thank you.

To be frank, and completely honest, it really didn't involve much. Go to builder, sign name on paper, give cheque for deposit, forget about it for a year or two (before closing, obviously), and then list it.

The strategy only really works if you get in on phase 1 of developments, because by the time the condo breaks ground, they're either sold out, or close to and price has already gone up $20,000.

Is it risky? Sure. Anything in life is, nothing is guaranteed. But without risk, there's no reward.
[OP]
Deal Fanatic
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Sep 8, 2007
9019 posts
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Way Out of GTA
squadz wrote: Thank you.

To be frank, and completely honest, it really didn't involve much. Go to builder, sign name on paper, give cheque for deposit, forget about it for a year or two (before closing, obviously), and then list it.

The strategy only really works if you get in on phase 1 of developments, because by the time the condo breaks ground, they're either sold out, or close to and price has already gone up $20,000.

Is it risky? Sure. Anything in life is, nothing is guaranteed. But without risk, there's no reward.
My old boss used to say "I've never met a rich pessimist"

Personally I'm more conversative but will go aggressively on a trade if I see opportunity...like commodity stocks 10+ years ago. I usually walk away too early but the other saying is "you never lose but locking in a profit". Looks like you found a trade that met your risk reward profile.
Member
Jul 31, 2007
304 posts
11 upvotes
Scarborough
cartfan123 wrote: My old boss used to say "I've never met a rich pessimist"

Personally I'm more conversative but will go aggressively on a trade if I see opportunity...like commodity stocks 10+ years ago. I usually walk away too early but the other saying is "you never lose but locking in a profit". Looks like you found a trade that met your risk reward profile.

You say you only pay 1% Sales Commission Fee to realtor. Normally when you list on mls. Client comes with another realtor, they are normally asking for 2.5%. 1% is listing agent. Total 3.5% is it not?
[OP]
Deal Fanatic
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Sep 8, 2007
9019 posts
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Way Out of GTA
blazinpista wrote: You say you only pay 1% Sales Commission Fee to realtor. Normally when you list on mls. Client comes with another realtor, they are normally asking for 2.5%. 1% is listing agent. Total 3.5% is it not?

I didn't say that.

But that being said I think you are right 1% to selling, 2.5% to buying. But maybe squadz has a different deal.
Temp. Banned
Aug 7, 2011
6623 posts
991 upvotes
Vaughan
blazinpista wrote: You say you only pay 1% Sales Commission Fee to realtor. Normally when you list on mls. Client comes with another realtor, they are normally asking for 2.5%. 1% is listing agent. Total 3.5% is it not?
The second condo was bought with the buyer not using a realtor.

Or you're correct, it would have been an extra 2.5%.

I put more value on the people who don't use realtors - more money for me.
Penalty Box
User avatar
Feb 21, 2013
344 posts
41 upvotes
Yukon
squadz wrote: I've done two so far this year.

First was a gross of $50,000 profit plus deposit back (5% of purchase), after commissions, it was about $39,000 profit. Capital gains might take off $7,000. So clearing $32,000. Held it for two years.

Second was a gross of $35,000 plus deposit back. Commissions was only 1%, my take was $32,000. No capital gains. Held it for two years.

Both were condos.

Bought one two weeks ago, holding it for a year or so, and will probably sell next May. We'll see what I can get for it. Looking for more.

Edit: I'll answer the questions:

- how many you've done? 4.
- what do you tend to make net of expenses? $30-$50,000.
- is it easier or harder to do it this year? No difference.
- areas of focus? Vaughan. Stay away.
- wait times to get a lot/house? Condo, 2-3 years for it to be built. Or if you mean wait times for buying, none at all.
- any concerns about risk if can't sell? Or view as a cant lose strategy? View it as can't lose, but I'm setup for the risk in case it doesn't sell.
- how do you find buyers? Do you pay a commission? My realtor. She takes 1%. I buy the condos from here as she sells them from the builder, she sells them for me after. Win win.
- easier to flip low price vs higher priced units? Low priced, definitely.
- did you get into this because stock market stalled? No. Got into it because it makes me more money than anything else, including stock market. 250% return on my deposit, and 200% return on my deposit is insane.
- do you have friends and relatives doing it also? Yup.
your tax to be paid is wrong. since you are doing this as a business, it's treated as business income so 100% of your gains is taxed. this is not capital tax treatment.
Jr. Member
User avatar
May 14, 2016
113 posts
33 upvotes
hipster wrote: your tax to be paid is wrong. since you are doing this as a business, it's treated as business income so 100% of your gains is taxed. this is not capital tax treatment.
Why would he voluntarily pay more tax? Sure he shouldn't be paying only capital gain and it should be taxed at 100%, but are you reporting the income you generate when you sell an item on Kijiji? Because if you're not, you're not calculating your taxes correctly either.
Temp. Banned
Aug 7, 2011
6623 posts
991 upvotes
Vaughan
DeShaun wrote: Why would he voluntarily pay more tax? Sure he shouldn't be paying only capital gain and it should be taxed at 100%, but are you reporting the income you generate when you sell an item on Kijiji? Because if you're not, you're not calculating your taxes correctly either.
Just ignore him.

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