Deal diary - Finding hidden value - with pics - Brampton, Ontario

[Luc Boiron]

Warning - long post!

My market is frothy - everyone seems to be a real estate investor, everyone wants to flip, and deals are very hard to come by, particularly on the MLS.

On this page I'm going to try to work through a flip, the deal and the renovation, and to keep updating until the property is sold. 

I bought a different property first, which gave me a better feel for comps:

At the beginning of October, I bought a four bedroom semi-detached house in Brampton, Ontario, a large and sprawling suburb of Toronto. They were asking $425,000, but it was a bankruptcy sale cross-listed by an agent from another city about an hour away. It was listed just before the Canadian Thanksgiving weekend, and the agent wasn't able to get it onto the Toronto MLS before they closed on Friday. This meant it showed up on the public MLS, but did not yet show up on the Toronto MLS where agents and their clients get alerts. I happened to be browsing the public MLS and saw the property. I called my agent @Claude Boiron, and went to see the property then looked at comps. We got paid $415,000 on Monday of the long weekend.

This flip came on the market:

Two weeks after buying this property, a similar property came on the market a few minutes away from this house. It was similar, but in better shape. However, the sellers, wanting a larger master, had converted the house from 4 small bedrooms to a 3 bedroom with a large master. From looking at comps, I knew that a house that could be sold as a 4 bedroom would sell for more in the area, even if the 3 bedroom layout might be more comfortable to live in.

The sellers were asking $406,000, but had under priced it to get a bidding war going. We were in competition, so I did not expect to win, but still put out an offer for what I was willing to pay. I offered $431,000, with no conditions, and a $40,000 downpayment. The offer was accepted!

Of course, this is the part where stress kicks in and I ask myself if I overpaid for the property, but I think I saw the hidden value in making this a 4 bedroom again where others didn't.

I'm closing on December 15, in 2 days. 

The plan is to do a cosmetic renovation, with a new kitchen, some new flooring, baseboards, smoothing ceilings, potlights, new windows, lighting, etc. On the front of the house, there is a large picture window that is too low - I'm planning on replacing it with a smaller window, which will allow me to enlarge the kitchen by running cabinets in front of the window.

I have a budget of $40,000, and this is a house where I hope I can finally get it done under budget.

The numbers are as follows:

Purchase: $431,000

Renovation: $40,000

Other costs: $47,000

Anticipated Sale price: $560,000 (I believe it will sell between $530,000 - $600,000)

Anticipated profit: $40,000

Pictures - Before!

The front of the house

The back of the house

The kitchen

The kitchen looks alright, but it's going to be completely done. The cabinets are old and repainted. I'll run new cabinets under the front window once I replace it.

Dining room

Sunken living room

The sunken living room is a nice touch and will look great with pot lights, but it means about half the basement is only crawlspace height. One of my concerns when buying it, but hopefully the living room will make it up for buyers.

Texturing living room TV wall

I need to get rid of this texture! I'm planning to incorporate something that will really stand out.

Second floor bath:

Already nicely renovated! I'll probably change the vanity.

Master bedroom

You can see the wall where this was once two bedrooms, and will be again!

Another bedroom

I might need to tone the colours down a little.

Basement

This basement needs some updating! And the walls and ceiling are stucco/popcorn....

So that's it! I'll be updating as I go, so follow along if you're interested in seeing how this renovation goes, and to see if I get my numbers for the sale price! 

I'll be happy to answer any questions you have. If you made it through this long post, thanks for reading!