Ian Szabo - Fix and Flip: The Canadian How-To Guide for Buying, Renovating and Selling Property for Fast Profit

Copyright 2013 Mark Loeffler and Ian Szabo

Published by John Wiley & Sons Canada, Ltd.

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Library and Archives Canada Cataloguing in Publication Data

Loeffler, Mark

Fix and flip : the Canadian how-to guide for buying, renovating and selling property for fast profit / Mark Loeffler and Ian Szabo.

Includes index.

Issued also in electronic formats.

ISBN 978-1-11818105-8

1. Flipping (Real estate investment)Canada. 2. DwellingsMaintenance and repairEconomic aspects--Canada. 3. Real estate investmentCanada. I. Szabo, Ian, 1976 II. Title.

HD1382.5.L63 2012 332.63'240971 C2012-906363-0

ISBN 978-1-118-23993-3 (ebk); 978-1-1182398-0 (ebk); 978-1-118-23988-9 (ebk)

Production Credits

Managing Editor: Alison Maclean

Executive Editor: Don Loney

Production Editor: Pauline Ricablanca

Assistant Editor: Brian Will

Cover Design: Adrian So

Cover Photography: Cover Image: Painter Hemera Technologies / thinkstock; Agent Hemera / thinkstock; Carpenter istockphoto / thinkstock; For sale sign istockphoto / thinkstock; Wooden board ihoe / istockphoto

Composition: Thomson Digital

Mark Loeffler

To Fiona

Ian Szabo

To the Szabo men and the Hickey men, creating generational change.

Acknowledgements

I have to thank our editor Don Loney and his fantastic team at John Wiley & Sons for all of their hard work and dedication putting this book together. As always Don, your patience and guiding hand were much appreciated.

I'm always grateful to Don R. Campbell and the Real Estate Investment Network (REIN) for providing world-class real estate investment education and providing the place and reason for us all to meet and learn. Thanks.

I'd like to thank all of the contributors to this book. Donna Ragona, Thomas Beyer, Gary McGowan, Wade Graham, Cindy Wennerstrom, Jeff Reed, and Sean Greene, your stories, successes, and difficulties have added much depth to the book. The readers will have a much richer experience because of your contributions.

Finally, I'd like to thank my wife, Mary, for her ongoing support. Without you this book and my whole career would not be possible. Thank you so much.

I'd like to thank my father, Tony Szabo. Dad, you got me into the renovations business, and I learned many practical strategies from you that I use today. More importantly, you taught me about work ethic and determination. Thank you.

Thanks to my father-in-law, Gary Williams. I know my actions don't always make sense to you, but you always support me and know I'll pull through. Your support means everything to me.

Thank you Adam Rosborough, you've always believed in me and trusted my path. Thanks for being a steadfast friend and supporter.

Huge thanks and much love to my wife, Tanya Williams, and my daughter, Brianna Szabo. Because of you two, I know that my life is complete. I don't need anything else to be happy in the world. Thanks for showing me what contentment looks like.

To my mentor, Philip McKernan, your Everest Business Mentoring program has helped change my life drastically for the better. Thanks also to the whole crazy crew of Everest participants. We've come a long way together, haven't we?

Introduction

Thanks for reading our book! Fix and Flip covers a topic that is commonly talked about, but very little understood. There seem to be two common views about fixing and flipping real estate for profit:

There are those who believe that flipping houses is fraught with risk. To some degree, they're rightif you don't know what you're doing. We've heard from people who think that fixing and flipping is some kind of scamthe flipper makes huge returns for little or no effort. But rest assuredthe fix-and-flip strategy is far from a scam. It requires the same amount (or more) of due diligence and effort as a buy-and-hold or rent-to-own investment.

Our advice: ignore the naysayers. Fixing and flipping houses is not impossible, nor is the strategy a scam. It truly is possible to profit by fixing and flipping houses. What you'll learn from this book is that it's not a fly by night undertaking, and that there are some excellent reasons to fix and flip rather than buy and hold, even if you want to profit from real estate over the long term. One of the biggest revelations you may have is that fixing and flipping can be a long-term investment strategy, even while it provides a fast return.

This attitude usually arises during a major boom in a real estate market. As with all real estate investments, fixing and flipping is easier to do in a strong real estate market (where purchasers exceed inventory) than a weak one. However, as we will teach you, successful fix and flippers will not rely solely on the market for their success. You can never outsmart the market, and we always recommend fixing and flipping strategically, in any market. A successful fix-and-flip investor will not rely on a strong market to turn a successful fix-and-flip project.

The misconception that fixing and flipping is easy is somewhat like a disease. Whenever people start to believe in this falsehood, the appearance of easy money disease causes people to do silly things. We've seen people buy properties at fair market value, spend tens of thousands fixing them, and then expect to make a profit. It defies all logic, because if you spend too much buying and renovating, and then can't exit for more than you've spent, it's the antithesis of profitability. Yet when people believe in the easy-money approach, they will make this most cardinal of errors.