Flip this house: Learn from two veterans
Buying and renovating for resale isn’t always easy or profitable
Joanne Hatherly, The Victoria Times Colonist
They’re provinces apart, but Randy Mackay of Toronto and Robin Pickard of Victoria have a few things in common.
They’re both 40 years of age and they both have found, fixed and flipped four houses.
That’s where the similarities end.
Mr. Mackay has sworn off flipping. Ms. Pickard is still in the game.
On paper, Mr. Mackay looks like an obvious winner when it comes to house-flipping.
A 13-year veteran of the residential construction industry, Mr. Mackay co-hosted HGTV Canada’s The Big Flip. Cameras followed Mr. Mackay and a friend for a year as they flipped as many homes as they could. During the same period, Mr. Mackay’s construction firm built 18 luxury homes, showing that he is a businessman with resources.
It’s a good thing. He put up $1.5 million in the race to make a fast buck off the hot real estate market. But one year later, Mr. Mackay refused to sign up for a second season.
“I’ve had enough,” said Mr. Mackay from Toronto. “I’m not doing it again.”
Meanwhile, Ms. Pickard, a full-time wife and mother, doesn’t even call herself a flipper, “because we actually live in the house. It’s our home.”
Ms. Pickard doesn’t flip as much as she flows from home to home, living in each one for about a year.
That’s her advantage. While Mr. Mackay fell victim to a stalled real estate market that hit in the middle of the show’s production, Ms. Pickard can weather those storms.
“We never buy a house that we can’t live in,” she says.
If the market slowed, Ms. Pickard and her family would simply stay put and wait out the downturn. Ms. Pickard has never lost money on a flip, but she has sometimes spent more on a renovation than she expected. Those costs have ranged from $5,000 to $65,000.
She demures when asked how much money she’s made on her Victoria-style leisurely flips.
Of Mr. Mackay’s four flips, he lost money on two and made money on two. He likes to say that he broke even, but admits that’s only true if he limits his audit.
“That’s if I don’t count my own time,” says Mr. Mackay, who reckons that if he also took into account six-per-cent interest he could have earned on the money if he hadn’t taken it out of circulation, his losses would go into the hundreds of thousands.
“It’s like gambling,” says Mr. Mackay. “If you cannot afford to lose, don’t get into the business.”
A cross-Canada 2006 survey for HGTV Canada found British Columbians are the most likely to know someone who has flipped a house (49%). Only 13% of respondents in Quebec would say the same. And 72% of respondents in B.C. agreed that house flipping can be a very profitable business.
Arnie Harnden, operations manager for MAC Renovations in Victoria, says some clients have approached MAC to do renovations for a flip, but MAC usually doesn’t get involved in the project because they would prefer to do a quality job rather than a quickie makeover.
Other times, Mr. Harnden says MAC has been called in to fix flips that flopped.
“I’m sure there’s people out there who will do a quality job, but there are those who are just in it for the money,” says Mr. Harnden.
That’s where flippers can get into trouble, says Ms. Pickard, who says she does every upgrade as though she’s going to stay in the house, because she may end up doing just that if the real estate market slumps.
She ponies up the cash for upgrades that are best left to professional tradespeople, such as plumbers and electricians. She saves dollars by taking on the surface work of painting and patching, with her husband’s help. They also reduced the cost of their renovation by selling some of the things they replaced, such as kitchen and bathroom cabinets.
She relies on a home inspector to ferret out trouble spots.
“We’ve walked away from some houses.”
She looks for homes that appeal to a broad cross-section of the market — one-level houses that were built with a unique architectural esthetic quality that appeals to both empty-nesters and first-time homebuyers.
“Location is everything.”
Would she ever start flipping houses in earnest?
“I don’t know,” says Ms. Pickard. She also doesn’t know how many more houses she’ll shine and sell. The tug toward creating a permanent home is strong.
“There are things I miss doing, like being able to take my time doing landscaping and gardening.”
Mr. Mackay has some advice for wannabe flippers.
“Don’t step up to the plate if you can’t hit a home run.”
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