So You Want To “Flip” A House.
Confession: Like many people out there, I am addicted to those reality TV shows with words like “flip”, “reno”, and “fix” in their titles. It’s hard not to be dazzled by the potential for huge profit margins, or get sucked in by the before and after shots!
Even in Toronto’s expensive, competitive housing market, you can still find opportunities to renovate a house for profit. It’s important to realize this could also include the potential to turn some well-placed renovation dollars on your existing home into a much higher listing price, provided you have realistic expectations for both the budget and the outcome.
I recently had the opportunity to put this theory to the test with a project north of the city, in Caledon Village. “Test” being the operative word!
My parents purchased a new home in Caledon Village in the early ’80s, and my mother is now retiring to Australia to be with my brother’s family. We knew we would have to update the interior to ensure the house would appeal to a broad range of potential buyers, and to get a sale price we could live with. Judging from what similar houses had sold for in “original” condition, we would have probably had to list for around $549k, and then settle for a price lower than that (less the buyer agent’s 2.5% real estate commission).
My mom decided to travel to Australia and spend a few months sorting out her new life, so we decided to undertake some renovations while she was gone. This would include dealing with my own childhood room, which we referred to as “the shrine”!
If you are trying to renovate a home that still has its contents, a good option is to call PODS. You can fill a storage container and have it remain on your own property for the duration of the work, or have them remove the container and store it at their facility. In our case, delivery of the container was $100, rental was $200/month on our own property, and pickup was $100 (plus HST).
When we evaluated the work to be done, we did walk-throughs with two professional contractors and a critical eye, and did a lot of our own online research for the average cost of materials such as vanities, faucets, cabinetry, lighting fixtures, flooring, and baseboard etc. It is critical to set up a budget right from the start and at least try to ballpark your estimated costs…and then build in a 15% contingency fee. One nice thing with this project is that my mom had maintained the home extremely well, and did not neglect to do repairs when they were necessary. The house had new windows, a new roof, a new asphalt driveway, and a new furnace, which are all very important features for new buyers. Thanks for shortening our checklist, Mom!
Work began with packing and moving as many belongings to storage as possible, and then tackling the wallpaper removal in every room. There are lots of chemical options you can use, but we chose the Wagner power steamer for its non-toxic approach ($80 at Home Depot). It’s a simple method, but it’s not simple work to scrape off the layers and adhesive. You won’t need any other sort of arm workout routine!
Of course, wallpaper removal invariably damages the drywall surface beneath, as does removing wood panelling, chair rails, kitchen cabinetry, tile backsplash, and so on.
We had a professional home inspector evaluate the house while everything was relatively open and exposed. This is often one of the conditions of purchase when buying a house, but you should also consider this step while renovating your own home. Using the report as a “to do” list will lessen the likelihood of any nasty surprises when a potential buyer has their own inspection done. Our inspector had several good tips for us that we added to our project, and we adjusted our budget accordingly.
The drywall was repaired by skim-coating it with low-dust drywall compound and then sanding with a pole sander and Shop Vac where angles allowed (see helpful tutorial on this blog: Ugly Duckling House). The process must be repeated several times until the walls are smooth and ready for priming and painting. One of our contractors gave us a great suggestion to tint the drywall compound with chalk dust when doing a second coat, so the new patches requiring sanding could easily be seen against the first white coat.
We ordered the first of two dumpsters from Bin There, Dump That (they charge $485 for a 20-yard bin for one week), and the next stage began with our professional contractors, Jason and Sean Deschamps of J. deConstruction (jdeconstruction.ca). They removed existing carpet and linoleum, prepped the floor, and installed new hardwood throughout the entire house. They also capped and stained a new staircase, replaced bi-fold closet doors with hanging doors, and installed new casings. We purchased all of the trim at the lumber store they suggested, Central Fairbank, and had a great experience there.
While they were doing the hard physical labour, we continued to paint trim and walls, replace switches/plugs/plates, install new lighting fixtures, and replace toilets.
As was bound to happen at some point, we encountered a couple of roadblocks and one minor disaster with the kitchen. Our original intention was to purchase cabinets from IKEA and have our contractors install them, but IKEA was changing their process and their product right in the middle of our project. We went to Home Depot to buy cabinets that they install, and fell in love with a Martha Stewart kitchen on display. However, after several meetings with a consultant, we found out it was simply not available (and they never did update the display to reflect this).
We chose an alternative from Home Depot based on the time frame we needed, and one week after finalizing the order, were told the delivery date would be two weeks later than promised. We are die-hard Home Depot customers, but they let us down on a few occasions during this project.
Disaster struck on the day the cabinets were to be installed, when the workmen discovered the kitchen floor had some cupping (buckling) from water damage. Unbeknownst to us a pipe had leaked over a weekend when we were not at the house, and the water had already soaked in and damaged an area of the floor. Although we were given the option of installing the cabinets anyway, since the footprint would cover the bulk of the damage (which would reduce over time as the flooring dried out), we elected to replace the floor and do the job properly. We had to reschedule the installation, call an emergency plumber, order more flooring, and beg our wonderful contractors to come back and redo the entire 200 sq ft kitchen area. Good thing for that contingency fee. And that drama you see on TV? It actually happens in real life!
The flooring was fixed, the cabinets were installed, and we purchased a lovely new granite counter from Latitude Countertops. Unfortunately when the granite installers came to lay the counter, they discovered the Home Depot cabinet installers had not levelled the lower cabinets, and when the granite was installed level, it sat with a visible gap at one end. Creating a trim fix became yet another item on our contractors’ to do list when they came back to tile the backsplash. If you are redoing a kitchen, check that your cabinets are level before the installers leave your house!
There wasn’t much we could do to upgrade the curb appeal during this winter project, but we did replace the lighting and the garage doors. This updated the look from the outside, added some much-needed light inside the garage, and also improved the insulation, which is a positive item to include in the listing. As a rough guide, you should count on this costing at least $1,000 per door (+ HST), including automatic openers.
We continued to paint, install, and caulk our own baseboards, prime and paint all the pickets on the banister leading upstairs (saving around $2,000 to replace them). It felt like we would never be done, and yet we could see the finish line.
The final few steps involved hiring a couple of other professionals: painters to help complete the last couple of rooms, an electrician to upgrade the panel and ensure outlets were to code, and finally, a home stager.
The importance of this last step can’t be overstated. I briefly considered trying to reuse some existing furniture in the newly open environment, but I knew it would not show the home to its best advantage. I called Lori Howard at Hope Designs, a terrific woman with almost a decade of experience in the business, and she came out for a consult. We hadn’t built a staging fee into our initial budget, so this is where the remainder of the contingency fee was spent. You are paying for professional advice, the time she spends designing the rooms, the time she and her team spend shopping for the furnishings (including artwork), the delivery and set up of all the furniture, the rental period (usually a month), and then the removal of everything at the end of the rental period. The fee of several thousand dollars is not inexpensive, but I swear to you, it’s worth every penny!
The work began on December 2, the house was listed on March 31, we received two offers on April 22, and a deal was finalized with one of them on May 7. We increased the value of the home by approximately $200,000, and everyone is happy with the outcome. It can be done!