I’ve expressed a couple times in the past on my blog that I’m not a big fan of real estate flipping, and that is totally about my own level of risk tolerance. However, The Canadian Real Estate Wealth Magazine published an interesting article with “The Top 10 Tips For Would-Be Flippers” and it’s interesting because those tips that they’ve put in there are specifically to reduce the risks that concern me about real estate flipping.

1. Secure Financing Before You Look At Houses

The first thing they mention is to secure financing before you look at the houses and the reason why that’s important is because if you do find a good property to flip, the chances are there’s ten people behind you looking at the same house. You need to be able to close quickly if you want to get a great deal on a house worth flipping. If you aren’t bringing something to the table that the guy behind you isn’t then you may be out of luck.

2. Know Your Market

The next highlight of the article is when they talk about choosing a specific neighborhood and sticking to it. You really need to know your market inside and out to be successful, especially when it comes to a flip. When I talked about real estate flipping before, I discussed the importance of having multiple exit strategies. What are you going to do if the original plan doesn’t work out?

3. Line Up Your Trades

In a flipping situation, it’s all about time. The longer you hold the property, the more it’s costing you. Make sure you have all your workers and crew lined up well in advance so things run efficiently.

Related: How To Choose The Right Real Estate Investment Strategy

4. Don’t Pay For Someone Else’s Renovations

A lot of times you’ll look at a property and they’ve done renovations that really don’t enhance the value of the property. Just because they’ve done the renovations, doesn’t necessarily mean the value of the property increases. Be careful!

5. Be Clear On What You Aim To Achieve & Run Your Numbers

My comment on this is simple: run your numbers, run your numbers and run your numbers. Make sure you’ve got your goal written down and you follow it regularly.

6. Don’t Get Caught Up In It

Real estate flipping can be a little bit like gambling and when you “fall in love” with a property, you have to back off and run the numbers. Don’t ever get emotionally attached to the project.

7. Add Value

One of the things I like about The Canadian Real Estate Wealth Magazine is the articles specific to renovations discuss the differences between a bathroom reno versus a kitchen reno, landscaping or roofing. Make sure that whatever it is you do that you are adding value to the product.

Related: Best Practices When Setting Up Real Estate Investments

8. Knowledge Is Key

The more you learn, the better you’re going to be. You’ve got to know your costs and your market. This is a point worth mentioning twice!

9. Do It Right

You are likely dealing with someone or some family’s future home so don’t try to cut corners and do it right. Don’t try to shortchange anything. In addition to a clear conscious, you can more comfortably justify a higher valuation.

10. Have Fun

I really have to commend the magazine for putting this tip in the article because I believe this is so important. Honestly, that’s why I’m involved in real estate and my business…I want to have fun.  I thought that was a great comment for these guys to be putting in their article because they are quite successful at what they do.

Although real estate flipping is not a strategy I’m personally interested in, if you equip yourself with the knowledge presented in this article and put it to action, you are giving yourself the best chance at success. Be sure to check out The Canadian Real Estate Wealth Magazine the next time you’re near a magazine rack, you won’t regret it.

In your experience, what have been the most important keys to successful real estate flipping? Leave a message in the comments below!

About the Author  
Ken Davidson is a Chartered Accountant with BDO Canada LLP, with their Kelowna accounting firm. Ken specializes in helping Kelowna businesses that are in start-up mode, companies in Kelowna that are in their growth phase and are ready to take their revenues to the next level, and professionals to secure their financial future with solid investment advice. Ken is best known for his strategic planning advice that positions him as a trusted advisor above and beyond being a Kelowna accountant that gives typical tax planning advice. To contact Ken for a Strategic Business Review to learn how he may be able to help your Kelowna business, email him at kdavidson@bdo.ca.