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Updated over 9 years ago, 08/09/2015
Condo Flipping Potential - Calgary market
Hey All,
It's been pretty quiet up here in the Canadian section so figured I would quit lurking and ask some questions and hopefully start some discussion.
I've been cruising trying to absorb as much information and set up as many systems as I can ahead of time for estimating costs etc, but my question now is: I am in the Calgary market which is fairly highly priced. It seems like there would be many opportunities to take some of the older condos/awkward layouts and have a fair amount of potential for flip profit but it seems that this is a far less popular choice.
When you compare equivalent (size and relative location) condos from older buildings to new builds there is a MASSIVE price discrepency: many new builds starting at 300k in the core with older similar sized and neighborhood properties going for less than 200k (but very dated). My question is, is it fair to base the comps on the new builds that are going up, or is the building itself a huge portion of the sale price when going to flip (if you had equivalent interior of an older building to a new building should the prices be comparable or will they always be far different because of the building itself).
Or if I am asking the right questions, please let me know and I can start looking into asking the right ones.
Thanks,
Jesse
I flip condos in Chicago and Florida. I like the in-town walkable locations in Chicago - I avoid the suburbs. I personally don't see much difference between the new builds and the rehabbed, as we rehab to the max in Chicago.
You don't want to be the first to try it, so be sure to find where others have had success.
@Jesse Shields , take a case in particular and called several different Realtors in the area and ask them to send you a CMA based on that particular unit being remodeled. This way you'll get an exact idea of what the price will be.
In Chicago a new construction unit is never priced the same as a rehab unit even if the size is similar. The new construction buildings have higher ceilings, have more isolation in the walls, and all the common elements are brand new: brick work, roof, windows, heating system, etc.
When you buy a condo, you buy the common elements also, and in a new construction you should have no special assm for many years to come.
I will say, no matter where you buy, the same situation should apply.
Still, you still have an opportunity to make money as long as you buy the condo at a price low enough to make a profit.
Learn a particular neighborhood very well, learn the construction prices, and after learning the neighborhood and prices, you'll be able to identify what a good opportunity is.
In the same time, identify few of the top agents in your area that understand flips and hire one to bring you deals from the MLS. Remember that all the brokers have access to exact the same properties, for you it's important to find someone that can see the gold nuggets in the market. Your choice of an agent is very important.
In the same time, playing the game with hiring multiple agents won't go well, as nobody will send you deals. Brokers get paid only at closing, and many times they do most of the work and someone else gets paid, therefor, even if they don't tell you upfront, they will pay no attention to your needs if they know you are working with multiple brokers and you'll just be floored by lots of properties in the MLS.
Really good points, I'd like to bring up supply/demand effect that might be worth considering when thinking about timing.
Alberta and Saskatchewan have both had labour shortages in recent years, while you might think this would increase demand, the recent drop in oil prices confuses the issue. While the oil price crash certainly has hurt the energy industry in both Alberta and Saskatchewan, it has hurt Alberta more because of the really high thermal recovery costs for the heavy stuff, and fracking costs for shale plays. This means more layoffs in AB and I was thinking there might be people moving into Sask looking for work in their arguably more diversified economy (Potash, Uranium, Agriculture, Manufacturing).
So I would guess we might see a slight pullback in demand in the near future for housing in Alberta.
What do you think?
Thanks for the insights @Jean Norton and @Lumi Ispas! This is great information and insight. It seemed to me like no one talks near as much about the flipping of condos as SFHs or entire Multi Fam buildings.
@Alexander Lafreniere I agree with your overview though I would wonder how much more job availability there is in the mining and Ag sectors in Sask. I know in the past couple years housing prices have rocketed up in Saskatoon due to mine expansions etc, but they seem to have tailed off and both Uranium and Potash seem to have slowed their growth a bit and the oil price drop has effected some of their central and southern jobs as well (Estevan and Kindersley areas).
It certainly seems as though the Calgary market is flooded with sales and few purchases since January, but my thought there was there could be potential for finding a better deal if properties are not moving. I know several developers have delayed/cancelled some of their $1MM infills, but am not sure how this could affect some of the more affordable (is that even a thing in Calgary?) units.
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Raymond
thanks! I thought I was doing that but I see now that it didn't seem to link. Thats good to know!
Jesse Shields I do not think you can compare buildings. Moreover, pay attention to the amenities one building offers over the other. Focus in on the location of the building and more specifically the location of the unit (I.e does it have southern exposure, faces parking lot rather than trees, etc?) determine the most desirable floorplans and flip those.
The questions you asked are very market based. I'm not sure anyone can really give you a firm answer as we do not know what's hot in Up there. Before you start flipping, you should know what people want. Sure, people want wicked nice interiors, but they sure as hell do not want a unit with no elevator, no washer/dryer, and it is directly over the garbage corral for example. thats what we see where I'm from and I'm assuming your dealing more with high rises - either way find out what people want, and buy that product low enough to make a profit after you have done the rehab. It's simple - don't make it more difficult than you have to. If you do the homework your decision making ability becomes so much easier. Good luck ay
Hi Jesse,
I am looking into flipping some condos in Calgary and putting together some JV partners. Where are you at with this now? I would love chat and see what steps you have taken.
Chris
just some reminders - make sure the condo is solvent - the fees and the financial stability of the complex will make a difference.
new complexes tend to have more/desireable amenities - you will not be able to address this with a rehab unless you buy the entire complex.
GL
@Chris NordsveenI've mainly been working through setting up documents, getting familiar with deal analysis, trying to establish rehab pricing for the various items and services.
As others have stated, I have been trying to gauge what the best path forward is at this point given what the job market might be doing or might not be doing.
Obviously for Calgary, oil is a huge part of the economy but things aren't as desperate (yet) for many companies. Trying to re-evaluate if the condo route is the best option right now but I am always down to meet up and discuss as well.
Jesse
@Jesse Sheids
I am always open to meeting like-minded individuals in my area. You never know what you might take away from a meeting. Seems like we asking some of the same types of questions whether it be on BP or in our respective circles. Let me know if you are interested in having a chat.
Chris
@Jesse Shields - The Calgary market is an interesting one. You would think that the recent drop in oil prices, project cancellations and layoffs would have had a bigger impact and add more downward pressure on prices.
The reality is, interest rates for FIRST time new home buyers are very low, making debt more serviceable, especially in the entry level price range. Additionally, most folks have savings and are willing to ride things out for a little while, which would mean that there would be a lag.
I would say deals can probably be had at higher price ranges.
In any case, flipping is not my niche I focus on, so hard to comment on your original question..
Ram
I would make sure you have a close look at the condo fees, a lot of these older condo's in Calgary that are $200,000 have huge maintenance fees.
Let's just say you renovate it and made it look like the Brand New Condo's that are going for $300,000. Your potential buyer will still need to pay the higher maintenance fee than the new condo's.
So if I was a potential buyer and I had the choice of buying a new condo for $300,000 with a $300/month maintenance fee, or a older nicely renovated condo for $250,000 with a $500/month maintenance fee, I'd go with the new condo as your monthly payment would be similar.
Plus the rest of the building won't be renovated which is something else that may deter a potential buyer.