I remember watching The Learning Channel (TLC) back in the mid 2000’s and it seems like every show they had on back then was about flipping houses and making it look easy to generate huge profits. There was Flip This House, Property Ladder and even a Canadian production called The Big Flip.
Back then I were busy flipping several houses a year, so all of this was right up our alley and the perfect programming for my wife and I to watch whenever we could. Except there was a bit of a disconnect between what we saw in real life here in Alberta, versus what was happening in the US.
Although the Canadian show was a much closer representation, they missed the boat on many aspects of real life flipping. Like the trials of financing in Canada and the cost of your own time, but that’s fodder for another article.
The point of this is there seems to be several new shows coming to TV that will be bringing house flipping back into people’s minds again. A&E has a new series called Flipped. This show will focus on former 3 time Survivor cast member Russell Hantz buying up discounted houses in Texas, renovating them and then flipping them.
A&E also has a new series called Flipping Vegas, Spike has Flip Men and even TLC is apparently tossing around another new Canadian show about flipping. Inevitably this will just incite a whole new rash of inexperienced flippers to jump into the market, potentially causing more market turmoil.
The biggest issue being, we are not the US and the rules, the costs and the results are considerably different here. While it’s not impossible to make money flipping property, the process is entirely different here.
The most obvious aspect is the confusion caused by the foreclosure markets in Alberta and how foreclosed properties are sold. Throughout the US, you can pick up properties in foreclosure for pennies on the dollar. In Alberta (and most of Canada), you typically end up paying full market value for a foreclosed property and are handcuffed by extra restrictions such as the property being sold “as is” by the lender.
These restrictions leave you zero or minimal recourse if the property isn’t quite what is seemed to be once you’ve bought it. With a normal property, if you discover massive deficiencies after the fact, that the homeowner should have been aware of you have legal recourse, but not on a foreclosure, it truly is buyer beware. Yet Realtors continue to market foreclosures as excellent opportunities, and they are, for the Realtor!
To be fair, not all foreclosures are going to be bad investments, but very few are the great opportunities they are portrayed as, they just require a very specific strategy to make them work and flipping may not be an option. They may work better as a rental property or even an owner occupied home instead, which means you need to know what you are doing when you go into a venture like a foreclosure.
So to all the “would be flippers” that will start coming out of the woodwork, make sure you do your homework. As the market for this picks up, we will once again see a proliferation of “flipping experts” descending on the city teaching seminars, can’t miss strategies and mentoring courses for new flippers. If you happen to attend any of these, just make sure it contains Canadian content that is really applicable, rather than advise that worked in Phoenix under an entirely different system.