Buyers buying land or glamour?

Buying & Selling Real Estate
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Buyers buying land or glamour?

Alex Kouramanis
Full Time Investor · Toronto, Ontario · Member since 2015 · 14 posts · 1 vote

Hey again all,

Just sold my home and looking to do another live-in flip in Toronto. I've noticed a lot of semi detached properties have been flipped in good areas in the city but I'm more of a detached guy. 

My question is, and it probably heavily depends on the buyer market in my area, is there a better return for me if I flip a semi or a detached property? In the same area, semis are going to be cheaper than detached and assuming of course lot sizes and sqaure footage are equal, I wonder if buyers of high priced, fully renoed properties prefer design over actual dirt/lot size which requires maintenance, gardening etc. I suppose the type of buyer who is looking for a high end finished product is not looking for yard work, but then again, maybe buyers want privacy with the option to do gardening when they retire etc...

Any thoughts based on experience in the area would be a big help! 

Thanks!!

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Phil Gardner
Real Estate Agent · Toronto, Ontario · Member since 2016 · 31 posts · 9 votes
10y
I would say if you're looking at the next purchase as a flip don't get too hung up on whatever you like semis or detached. But the question is very market specific, even within the city there are so many different niches, and you need to know what buyers in that specific area are expecting to get out of a house. For example, properties in Leslieville are typically expected to be detached 30 footers with quite a traditional exterior with a modern transitional interior. Full blown modern looking houses in that area tend to sit longer. We're currently doing two properties on Trinity Bellwoods and they are transitional modern semis. However regardless of what you're building, everyone is expecting a high quality of finish with a well designed layout. Buyers have become so educated in this city, and there are so many high quality properties being turned (and poor quality) buyers really know what to look for nowadays.
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  • Russell BrazilBusiness Member
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    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    10y

    This is such a market specific question. In DC our most popular type of property is a Rowhouse, and they are attached on both sides. (Not to be confused with a modern townhouse). Even amongst Rowhouses....a Victorian is the most desirable, then a Petworth/Wardman style, then the Federal style is the least desirable.

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  • Luc Boiron
    Specialist · Toronto, Ontario · Member since 2016 · 564 posts · 425 votes
    10y
    Alex Kouramanis I don't know that there is a good answer to this. Semi's are cheaper to buy, and will sell for less. That is attractive on both ends, because it can allow you to get in cheaper, and it allows your buyers to get into a neighbourhood cheaper than a detached house. In a nice neighbourhood, I think the difference between detached and semi would be wider. Once you pass a certain point, $1 or 2 million, buyers will want the detached house in most neighbourhoods. The houses on Bridle Path would not be worth nearly as much if they were semis. That being said, just look at comps. How much value can be added per dollar you spend on Reno? If a semi can be bought for $200k, you spend $50k on renos, and it sells for $300k, if you are buying a detached for $250k, putting $75k in, will it sell for $400k?
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  • Claude Boiron
    Real Estate Educator, Mentor, Investor · Toronto, Ontario · Member since 2015 · 206 posts · 86 votes
    10y

    @Alex Kouramanis, I agree with @Luc Boiron. I don't believe you can peg a profit ratio as being better with detached versus semi, or vice-versus, at least not in the GTA.

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  • Phil Gardner
    Real Estate Agent · Toronto, Ontario · Member since 2016 · 31 posts · 9 votes
    10y
    I would say if you're looking at the next purchase as a flip don't get too hung up on whatever you like semis or detached. But the question is very market specific, even within the city there are so many different niches, and you need to know what buyers in that specific area are expecting to get out of a house. For example, properties in Leslieville are typically expected to be detached 30 footers with quite a traditional exterior with a modern transitional interior. Full blown modern looking houses in that area tend to sit longer. We're currently doing two properties on Trinity Bellwoods and they are transitional modern semis. However regardless of what you're building, everyone is expecting a high quality of finish with a well designed layout. Buyers have become so educated in this city, and there are so many high quality properties being turned (and poor quality) buyers really know what to look for nowadays.
    2Reply
  • Alex Kouramanis
    OP
    Full Time Investor · Toronto, Ontario · Member since 2015 · 14 posts · 1 vote
    10y

    Thank you so much everyone for your insight!! Very helpful indeed. 

    I wonder if there will be a change in buyer's moods too; some of you mentioned niches, looking to get into smaller units within a threshold (i.e. up to a million bucks) and when you surpass that, quality and space becomes the focus, obviously within the stronger neighbourhoods.

    We got a pretty nice margin from the sale of our live in flip. In fact, it seems to me that my best move would be to repeat a winning formula. 

    I do of course worry that there is a ceiling in the east end of the GTA; some of the due diligence I have done and also my experience in selling our home leads me to think that if affordability enters buyers' minds, they will either look further out of the city for dirt or buy lower entry point homes (e.g. condos, towns) closer to trendy areas. If income picks up a bit in late 2016, and following that, interest rates, this might be a catalyst for that line of thinking...

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