I am looking to do a flip in the Edmonton area either near whyte ave west of 99th st or walking distance to West Edmonton Mall.The Lrt will be there before to long and were looking to use Air B N B. I always thought a place would get a lot of traffic if there was a hospital within walking distance.

These are some numbers I came up with. Hoping for someone to help critique them... I have spoke to realtors and continue to I just want as many opinions as i can get. 
 
Purchase Price: $315 000 (20% is $63 000)
Renos: $75 000 
Rents: Cashflows up to $1000/mth, twice as much on air b n b
Refinance: $490 000

ARV (after reno value) $490 000
$490 000 x .8 =$392 000
-$252 000 (mortgage)
-$153 500 (loan)
=-$13 500 left in deal

LOAN: $151 500 @4.5% for 6 mths = $153 500
Down Payment: $63 000 
Renos: $75 000 
Appraisals $700 (1st one and reappraisal) 
Closing cost $1750
Property Management $500 (inital fee to find a tenant for 1 year) *prob have one suite with long term tenant
Home Inspection $600
4 Mths vacancies $10 000 

@Scott Galloway

What is the size of the house? How many beds and baths? Great area for a rental and should expect to see prices climb a bit in the next couple years. I am also looking for someone with more experience in flipping places as I would like to brrrr my next property.

What are you doing for a loan to complete the Reno?

Looks interesting Scott, I have a buy and hold in Chappelle and am looking to buy more. Have you done many of these before?

@Cody Hill

Hey thanks for the reply it’s great to hear from someone local on here.

Something large enough for 5 bedrooms. 3 up and 2 down with a legal suite. Not sure about baths. 2 up min & 1 down.

Whyte ave is a great area wether you do short term or long term. It’s super expensive tho as I’m sure you know. I think that area will appreciate in value quite a bit soon tho.

WEM area isn’t anything special for long term renters

apparently. My buddy manages a lot of properties and says it’s nothing special, he was telling me this tonight. He said the lrt would maybe make them rent out for another $50 /mth. I don’t know how much a property would appreciate once that lrt is up and running around there though?

So I’m not to sure what the right move is. I’m sure both would work! I really need to talk to some more air b n b managers. I’ve talked to two and they say it can be a lot more profitable and I’ve heard that elsewhere to but to sit down and get a lot of questions answered about it has been a challenge.

I have zero experience with this stuff but plan to do something with a buddy and his brother when they are less busy this winter. If you want to talk to someone who knows what they're talking about in this area contact the guys at mogul realty group. They specialize in working with investors. Calvin there has done a few BRRRR's I believe. I think he's got 6 doors..

I got his number if you want.

@Luc H.

No sir I’m still a virgin. Waiting for my buddies to have some more time.

I work on the pipeline so I’m teaming up with a buddy and his brother so they can help me out when I’m not around. Plus the one brother is pretty deadlee with construction.

@Cody Hill

I have a condo in Sherwood Park I’m looking to sell I’ll prob have about 40k once it’s sold. So I’ll use that for some of the down payment and the old man has agreed to help with funding at a very reasonable interest rate for the rest and the Renos.

The condo is worth 195k right now . If I can even trade this condo for the place I’m talking about I’ll be happy.

I guess the perfect brrrr is getting all your money out of the deal but I don’t know how often that happens around here. Seems insane to me. I know people do it all the time in the states but here?? If I somehow can manage to do that i want to get as many legal suites as possible before the market goes up here lol.

@Scott Galloway

I do like the area and do see a lot of investors doing infills around there. Is pretty pricey although you do have the university close and a lot of people wanting to be in that area. I would be a little concerned with the quality of renters you would find in that area. More short term renters I would think typically younger and less settled down. May expect higher turn over rates although it shouldn't be too hard to find tenants.

I have wanted to try Airbnb and was tempted to try it with my one basement suite as the house is 7 min away from the airport. I would check the area that you wanna buy in for Airbnb and see just how booked up they are. Will kind of give you an idea what people are getting rent wise and how many nights they are booking up for. Will also need to factor in cleaning costs and someone to service the place I would imagine, since you dont want to be doing that everytime someone leaves.

Getting all your money out would be huge but even if you get stuck with 10k in the deal for a cash flowing asset, your laughing. Biggest first step is action, you can learn how to perfect the process along the way.

@Scott Galloway   Why the $150K loan when renos are half of that?  Speaking for a place I had in Vancouver, once the LRT (skytrain) opened in the area, the house prices increase a lot, not the rent per se, but the value of the home itself.

@Theresa Harris

To help with a downpayment. I’ll need 20% down.

Originally posted by @Scott Galloway :

@Theresa Harris

To help with a downpayment. I’ll need 20% down.

Okay. I'm not sure you can take out a loan for your down payment in Canada-except maybe a HELOC-I could be wrong.

@Scott Galloway  

Sounds like an interesting idea. Having done a number of BRRR's in Edmonton I think your numbers may be a bit optimistic. In my experience fully renovating a 3 bedroom house around 1100 sq ft and adding a new legal basement suite where one didn't exist before costs closer to $100k. This was us general contracting the rehab and hiring trades for most of the work. Of course it also depends on what your finished product looks like, if you use trades or "handymen" and if you cut any corners along the way.

I have not actively looked at the Whyte ave and west of 99 st area recently but my gut tells me that finding a house that isn't a knock-down for $315k would be a tall order. I'm guessing lot value in that area is at least $350k, but again having not looked recently I may be out to lunch. Those properties are older and therefore typically have smaller footprints with only one bathroom upstairs and up to 3 small bedrooms. I would imagine it would be difficult but not impossible to fit a 2 bedroom suite in the basement without it being cramped. There is usually more issues involved with rehabbing older properties too. 

If we could buy properties for $315k, put $75k into them and have them appraise at $490k and cashflow $1000 monthly we would be doing that all day long but we quit doing BRRR's consistently over two years ago (we did a one-off suited house flip last fall) because the numbers weren't there.

We also run STR's (short term rentals) in Edmonton and more recently Canmore. It's true, you can definitely produce more net income monthly compared to a long term rental but there's a heck of a lot more day to day work involved. You're running a 24/7 hospitality business on top of everything else you're doing and if you're not on the ball your reviews will reflect that and your income will soon drop as a result.

We are considering shutting down one of our Edmonton STR's because the income has actually decreased over the past 12-18 months with so many people throwing their properties on Airbnb. We are superhosts with a 5 star rating on all our listings so it's not the experience we offer causing the income decline. With that being said we actually manage STR's for other people and just picked up one near WEM. So far it's doing well and I suspect that being near the mall is one of the better locations in Edmonton.

My wife and I run a STR Meetup called Edmonton Short Term Rentals Association. You might want to check it out if you want to learn more about STR's. It's free and I think the next meeting is in September. There is also plenty of training courses and podcasts on the topic.

I hope my post didn't sound too negative, I was just trying to share my experience with you and I'd hate to read a post 12 months from now where your flip didn't turn out the way you hoped. My suggestion would be to dig deeper into the numbers before you pull the trigger. Cheers.

@Cody Hill

It is pricey! Looking at that area more it almost looks to me like you could knock a place down and build for about the same price as renoing a ****** house. Prob why there’s so many infills.

I am a little concerned about the quality of renters. I’m leaning more towards wem area if I do something in Edm.

Would you manage yourself? The way I see it is if you want to try it and it doesn’t work, well who cares rent it out to long term tenants. At least you tried. What if you didn’t and found out later you could’ve made that much more? They have that new amazon building going up there and I think there’s also some huge business starting up around there if it hasn’t already for lightning for grow ops and what not. I think that’d be a great place for it!

I’ve looked a ton on air b n b. It’s extremely confusing. Some places look like horrible locations for air b n b but there booked and look profitable. Some look like great locations and they don’t look profitable at all. I don’t get it. I’ve tried to reach out to managers with hardly any luck.

I’m with you on it still being huge to have 10 k left. I was originally looking at just building a turn key rental. My buddy sells homes and could get me a nice new house with legal suite built for 430 ish.. that’s 86k down (20%). Seemed like a great idea at the time but if you can buy a place and Reno it, pull your money back out... even if you had 30k left of your own money your saving 56k on one deal...it’s nuts.

I want to get this going but I’m waiting for a buddy to be less busy. He runs a business and is almost to the point where he won’t have to do much and can focus more on this.

There is also 10 million different ways and places to do this stuff which is making it really hard to get closer to making some moves. Lol

@Ash Badry

Hey thanks a lot for commenting, you could be right. I still want to hear it for sure.

How were these places set up that you were renovating? I see some houses that look like they’d be a nightmare to do and some that look like they’d be easy (for a good contractor).. places with kitchens already that aren’t legal for example.. Were you buying these places 20k under value at least. ? Buying from wholesalers? I’m sure you are but I keep hearing that’s where the money is made. I know it looks like the renos are adding a ridiculous amount of value but some of it is the money your making buying under value Which I’m sure your considering..we’d have a lot of sweat equity going into it to. I could still be way offff, not to sure...

Your prob right about whyte ave area it’s stupid expensive. $315k would prob be your lot price with something you’d prob want to tear down.. I’m leaning towards wem . I think with the hospital there and the lrt coming your gonna do well.

I hear Canmore is ridiculously profitable for that. Would you care to share what your cashflowing there? I am interested in doing a flip and hold in bc around the okanagan at some point then moving there maybe in ten years time . That would be way better for short term then here I would imagine.

I’m Just not exactly sure what the best place to do it would be and id love to live anywhere around there. I don’t know what the markets like tho.I actually msgd a realtor about that today.

I’m not really sure what the right move is here. There is to many options lol. The more I read or hear about investing the harder it is to just pick something and focus on it. I want to do something with a couple buddies for sure. I want to be mainly investing in it because I work on the pipeline so I can save a lot of money then in a few years help them full time. The one guy has a property maintenance company that is gonna he pretty hands off for him soon and his brother is deadlee in construction and can kind of walk us through it. He’s no handy man either he’s been running a successful plumbing company for years and is super smart so I think there is a lot of potential.

It might be smart to just get more into flipping at first and save some money then when we get really good go use the brrrr strategy in places where you know it’ll work... you wouldn’t have to go to far. Check out investor girl Britt on instagram who was on podcast #320.. look what she did in Saskatchewan.

Purchase $42 000

Renovation $30 000

Total invested $72 000

Arv $131 000

Ltv 80% $104 000

Equity out $32 000

Rent $1100

Expense $730

Cashflow $370

https://youtu.be/NZXU_rEHxOg

The way I see it with this brrrr stuff is even if your not pulling all your money back out and even if my reno estimates are out to lunch your still doing way better then if your buying turn key..

These numbers I threw up we’re pretty much just to see if I’m even close I kinda pulled them out of my arse. So I am really happy you commented on it and I’d love if you helped me adjust them for a rough estimate.

I’d also be down for sure to check out that meeting if I’m around and it’d be great to get together with you and talk some numbers about what I could get for a place around wem... maybe one day I’ll be getting you to manage one for me. Would you care to share your listings?

@Theresa Harris

Prob not, the loan is from my dad.

@Cody Hill

What do you think of the numbers I came up with? Out to lunch? I honestly have no clue. It’d be interesting to see if it’s costing you as much as it’s costing @Ash Badry who is using a lot of contractors.

Are you doing a lot of the work yourself Cody?

I know for me wed do as much as we can ourselves and sub the rest. Me and a lot of my friends have worked in the trades for years so we’ve met a lot of people who are really good but work full time for 4K a mth, don’t get offered overtime and could use/want the extra $ doing this kinda stuff..

Originally posted by @Scott Galloway :

@Theresa Harris

Prob not, the loan is from my dad.

Then you are fine.  Nice of your dad to help out.

@Scott Galloway

Hi Scott, right now I do manage all my properties but with that being said I have built in property management into my numbers. I am also a millwright and an apprentice electrician so I am sort of handy to take care of a lot of the issues that come up.

Sounds like you need to niche down a bit and decide exactly what kind of properties you want to do. After you get that decided drive around and find an area you want to invest in. There are deals to be found everywhere and so many ways to invest, it can really make it hard to focus on just one! Trust me I know I was there myself lol (not saying I have it mastered by any means)

I have done it both ways, doing the work myself and hiring out.

It's really hard for me to say without seeing the property and how much work needs to be done, things like roof's, furnaces, windows can all be big expenses if they need to be done. If the property has water issues or foundation issues your prices could be astronomical. Older homes usually need new windows put into the basement for egress as well which can cost a bit. From an empty shell basement I have been around 30-50k. This all depends on the size and finishes.

Strictly judging by the price of the property and location of it I'm going to assume it needs a decent amount of work. If you are hiring out the work 100k is probably not a far stretch. Having a contractor you trust come quote the project is your best bet, then after get a couple more quotes.

Doing the work yourself can save you a ton but man that can be a nightmare! Working all day and then coming home to work more really sucks. With that being said, a guys gotta do what a guys gotta do to get ahead. I was able to do a 1300sqft bungalow (had an in law suite) and turn it into a rental with a legal basement suite for about 35k. That was very hands on and contracted out a few jobs I was not comfortable with.

Has been a good rental though, got all in for $325k and rent the top out for $1650 and basement at $1250.

I see you mentioned a new build which is exactly what I did in leduc this winter. I bought a new build, got a basement suite put in for 400k. No one was buying any houses at the time as it was those few weeks of -30C. So I was able to get a pretty good deal at the time. I did all the landscaping myself which didnt cost that much besides a lot of manual labor but have re-appraised the house recently for 500k. Not bad for having a brand new rental with warranty still. Wont get my landscaping costs back out (about 6k) but I should be able to get my down payment back.

@Scott Galloway
I'm not sure what you're asking when you say "How were these places set up?". Most of the houses we BRRR'd were dated with either finished or semi-finished basements. Only one already had a kitchen in the basement. We were buying the least expensive houses we could that were in our specific target neighbourhoods and met the rest of our criteria. There are very few real wholesalers in Edmonton and we've never bought a property off of one.

Like Cody said, putting in sweat equity can be a great way to go but the main thing I see inexperienced people doing is not accounting for the money they should be paying themselves. If you choose to do work yourself that's fine but there is a cost to doing that. For every hour you spend swinging hammers you could be working at your day job making X dollars or putting that time into finding more deals and raising money. These last two activities are actually much higher value than any physical work you could do at the property. A lot of people will just tell you how much money they had to spend on materials and contractors and either ignore or not even realize the cost of the time they put in. Either way is fine, just be aware of your true costs. 

You're right, Canmore is a great market for STR's. It's very seasonal and therefore our income fluctuates and we own the properties within a LP so it's not so easy to say what our "cashflow" is. What I can say is that getting nightly rentals in the summer of over $600 per night doesn't suck.

Be careful about investing in markets like the Okanogan as they can be extremely seasonal. Doesn't mean it won't work but be sure to do your homework.

Send me a PM if you want to see some of our listings, I think listing them in threads is frowned upon.

Originally posted by @Cody Hill :

@Scott Galloway

Hi Scott, right now I do manage all my properties but with that being said I have built in property management into my numbers. I am also a millwright and an apprentice electrician so I am sort of handy to take care of a lot of the issues that come up.

Sounds like you need to niche down a bit and decide exactly what kind of properties you want to do. After you get that decided drive around and find an area you want to invest in. There are deals to be found everywhere and so many ways to invest, it can really make it hard to focus on just one! Trust me I know I was there myself lol (not saying I have it mastered by any means)

I have done it both ways, doing the work myself and hiring out.

It's really hard for me to say without seeing the property and how much work needs to be done, things like roof's, furnaces, windows can all be big expenses if they need to be done. If the property has water issues or foundation issues your prices could be astronomical. Older homes usually need new windows put into the basement for egress as well which can cost a bit. From an empty shell basement I have been around 30-50k. This all depends on the size and finishes.

Strictly judging by the price of the property and location of it I'm going to assume it needs a decent amount of work. If you are hiring out the work 100k is probably not a far stretch. Having a contractor you trust come quote the project is your best bet, then after get a couple more quotes.

Doing the work yourself can save you a ton but man that can be a nightmare! Working all day and then coming home to work more really sucks. With that being said, a guys gotta do what a guys gotta do to get ahead. I was able to do a 1300sqft bungalow (had an in law suite) and turn it into a rental with a legal basement suite for about 35k. That was very hands on and contracted out a few jobs I was not comfortable with.

Has been a good rental though, got all in for $325k and rent the top out for $1650 and basement at $1250.

I see you mentioned a new build which is exactly what I did in leduc this winter. I bought a new build, got a basement suite put in for 400k. No one was buying any houses at the time as it was those few weeks of -30C. So I was able to get a pretty good deal at the time. I did all the landscaping myself which didnt cost that much besides a lot of manual labor but have re-appraised the house recently for 500k. Not bad for having a brand new rental with warranty still. Wont get my landscaping costs back out (about 6k) but I should be able to get my down payment back.

@Theresa Harris
Yes he is a very nice man! I like to refer to him as Ned Flanders. 

@Cody Hill  
Yea that's smart to do that, I would do the same, and I guess it would depend on the house whether I want a manger or not. That helps. I'm a little bit handy but don't have much experience other then some plumbing. I do know a ton of great cheap trades guys tho who work full time and could always use the extra work. So that could help save some money. 

I was thinking the same, It was driving me nutz not being able to focus in on something. There is just to many different things a guy can do. I guess that's a good problem to have. Since the last post I have gone to a mogul masterminds meeting and an Edmonton Real Estate Mastermind meet up, I also met up with two guys who flip and add secondary suites. I think right now I'm going to focus on selling this house I'm living in that's brand new that I hate.. long story.. a condo that doesn't cash flow well that I have in sherwood park and build a nice modern looking house with a single bedroom legal suite below. Ifff the wife will allow it lol. I think she will if we design it properly. Right now were looking at having super homes building it for us. My buddy sells homes for them, hes also a property manger to. We could potentially just hire the contractors ourselves but I'm not sure how much I'd actually be saving. I'm going to have to look into that. My buddy said definitley do the yard myself (deck, fence, sod, ) You think you'd want to take a look at what I'm doing when it gets drawn up and give me your opinion on if its a good deal or not or if you think there is anything else worth trying to do myself to save money on. 

How have you gone about finding these deals? Have you done any wholesailing? It seems like it'd be easy enough to do if you knew investors who wanted houses and could find the deals? I don't know much about it but I'm very interested. 

All in for $325 and renting for that amount is crazy. 

Thats nutz you were able to refinance and get your down payment back. That is pretty much exactly what I want to do. I could also build another one if i wanted to, that'd be one option. I just want to get this going first then figure out what I want for a rental property. I've been hearing really good things about turning duplexs into 4 plexs. 

We should get together and chat about this stuff some time if you want. 


@Ash Badry
I was wondering if you were adding secondary suites I think. I heard everything else won't make any money right now. What exactly is a real wholesaler? I don't know much about it I want to start reading about it here right away. 

I am leaning towards doing as little as possible now. I've been talking to a guy with 19 doors and that's what he's been doing and its been working for him. So if you can get away with doing that welllll that seems like a no brainer. 

I completely agree with you and finding more deals and raising money would be a hell of a lot funner. I love looking at anything relating to this stuff.  

I will pm you some time soon here, thanks.