Looking for advice from the slew of television programs touting the profitability of flipping houses is a mistake, says one real estate agent.
“I call it the HGTV mentality,” Erwin Szeto, a sales representative with Rock Star Brokerage Inc., in Hamilton who specializes in helping property investors, told CREW
“Whenever [the shows] talk about flips, they don’t spend enough time on locating the property, identifying the deal.
“The error that most new investors make, especially those looking to flip is that they are only concerned about the execution – making the property look good – but they overlook what they paid for the property.
“When you buy too cheap of a home the room isn’t there for the appreciation.”
Sometimes cheap housing is cheap for a reason says Szeto.
He cites an example of a novice investor who purchased a home located at the intersection of two of Hamilton’s busiest streets. “The property was cheap because no one wanted to live there,” says Szeto.
His advice to newbies is to buy in neighbourhoods where people have a lot of money and are emotional about buying a home, such as Oakville.
He also cautions against looking for the quick flip. “I tell people that historically you make more money buying a flipped property and holding on to it, renting it, than you do just flipping the property.”
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For rookie investors one of the first decisions is whether to flip a property for profit or hold on to it while bringing in rental income and watching its value rise.