Looking for people who have flipped houses in Alberta!

[Scott Galloway]

I am looking to do a flip in the Edmonton area either near whyte ave west of 99th st or walking distance to West Edmonton Mall.The Lrt will be there before to long and were looking to use Air B N B. I always thought a place would get a lot of traffic if there was a hospital within walking distance.

These are some numbers I came up with. Hoping for someone to help critique them... I have spoke to realtors and continue to I just want as many opinions as i can get. 
 
Purchase Price: $315 000 (20% is $63 000)
Renos: $75 000 
Rents: Cashflows up to $1000/mth, twice as much on air b n b
Refinance: $490 000

ARV (after reno value) $490 000
$490 000 x .8 =$392 000
-$252 000 (mortgage)
-$153 500 (loan)
=-$13 500 left in deal

LOAN: $151 500 @4.5% for 6 mths = $153 500
Down Payment: $63 000 
Renos: $75 000 
Appraisals $700 (1st one and reappraisal) 
Closing cost $1750
Property Management $500 (inital fee to find a tenant for 1 year) *prob have one suite with long term tenant
Home Inspection $600
4 Mths vacancies $10 000 

[Ash Badry]

@Scott Galloway 

Sounds like an interesting idea. Having done a number of BRRR's in Edmonton I think your numbers may be a bit optimistic. In my experience fully renovating a 3 bedroom house around 1100 sq ft and adding a new legal basement suite where one didn't exist before costs closer to $100k. This was us general contracting the rehab and hiring trades for most of the work. Of course it also depends on what your finished product looks like, if you use trades or "handymen" and if you cut any corners along the way.

I have not actively looked at the Whyte ave and west of 99 st area recently but my gut tells me that finding a house that isn't a knock-down for $315k would be a tall order. I'm guessing lot value in that area is at least $350k, but again having not looked recently I may be out to lunch. Those properties are older and therefore typically have smaller footprints with only one bathroom upstairs and up to 3 small bedrooms. I would imagine it would be difficult but not impossible to fit a 2 bedroom suite in the basement without it being cramped. There is usually more issues involved with rehabbing older properties too. 

If we could buy properties for $315k, put $75k into them and have them appraise at $490k and cashflow $1000 monthly we would be doing that all day long but we quit doing BRRR's consistently over two years ago (we did a one-off suited house flip last fall) because the numbers weren't there.

We also run STR's (short term rentals) in Edmonton and more recently Canmore. It's true, you can definitely produce more net income monthly compared to a long term rental but there's a heck of a lot more day to day work involved. You're running a 24/7 hospitality business on top of everything else you're doing and if you're not on the ball your reviews will reflect that and your income will soon drop as a result.

We are considering shutting down one of our Edmonton STR's because the income has actually decreased over the past 12-18 months with so many people throwing their properties on Airbnb. We are superhosts with a 5 star rating on all our listings so it's not the experience we offer causing the income decline. With that being said we actually manage STR's for other people and just picked up one near WEM. So far it's doing well and I suspect that being near the mall is one of the better locations in Edmonton.

My wife and I run a STR Meetup called Edmonton Short Term Rentals Association. You might want to check it out if you want to learn more about STR's. It's free and I think the next meeting is in September. There is also plenty of training courses and podcasts on the topic.

I hope my post didn't sound too negative, I was just trying to share my experience with you and I'd hate to read a post 12 months from now where your flip didn't turn out the way you hoped. My suggestion would be to dig deeper into the numbers before you pull the trigger. Cheers.