Before you have to answer this question, I’m going to lay out a couple of houses for you that I viewed this past weekend. By the end of this post you should have a pretty good assessment of the type of homebuyer (and risk-taker) you are.
To set the scene, both houses are within a couple of blocks from each other in the North End of Halifax. And that is pretty much where the similarities of the two houses end.
Let’s just take a moment to appreciate this stunning beauty.
What do you think? It’s AMAZING, right? The company that did the flip on this house did an incredible job, and I love to see old, dated houses brought to their full potential. They were able to maintain the old charm and character of the house while bringing it up to speed with modern necessities and function. However, let’s talk about the numbers on this house. This 3 bedroom, 1 bathroom house is listed for $479,900 which makes it the second most expensive house currently listed in this neighbourhood. The #1 most expensive house in the neighbourhood is only $10,000 more, and it’s been on the market for 250 days, with steady drops in price for the last 10 months. And it has a two-car garage and a landscaped backyard. Needless to say, this Fabulous Flip is overpriced (IMO).
The other nice thing about using ViewPoint as a real estate search tool (that Realtor.ca doesn’t offer) is you can see the sale history of any house on the market (i.e., how much the house was previously bought for). When I look at this house, I see it was bought in March of this year for $284,000. That’s $195,000 less than what they’re trying to sell it for right now, 7 months later. The question is, how much do you think the sellers spent on the renovation?
The reason I went to view this house on Sunday was because I knew they had listed it for almost $200,000 more than they bought it for and I wanted to see what $200,000 in renovations looked like. After viewing the property, I can once again state that the company did a very good job, and a very big job at that. They actually added onto the square footage of the house to make a larger kitchen, add a ½ bathroom downstairs, add laundry to the main level, and the finishing touches that were installed in the bathrooms and kitchen were top notch. But do I think it’s worth $195,000 more than what they bought it for?
Not a chance. I think they put a lot of money into it (maybe more than they originally intended), but I also think they are trying to make a decent profit on this house. A profit that I honestly don’t think will come to fruition given the prices of comparable properties in the neighbourhood.
Now, let’s move onto option #2 and see whether this one peaks your interest.
First impressions, what do you think? Maybe I shouldn’t have shown you the Fabulous Flip first. BUT, here’s the nice thing about the Wretched Reno. It’s listed for $285,000. That’s almost $200k less than the first one. And here’s the really sweet part. It’s not a 3 bed, 1 bath house but rather a 4 bed, 2 bath house. Not only does it offer the extra bedroom and bathroom, but it also boasts a full finished basement AND the yard is double the size. This property also offers room to park at least 3 cars. To recap, the finished square feet is over double the size of the first, and the outside lot size is also double the size of the first. The Wretched Reno is just… dated.
So here’s option number 2, if you’ve got a bit of a sense for adventure, an eye for design or simply love taking on new projects. What if YOU renovated this house and took on the flip yourself? In my mind, this house would produce way more potential than the first house. They’re only a few blocks from each other in location but this house has so much more room, making it appealing to larger families if you want to re-sell in the future.
However, this is where the two camps divide – some people want a move-in ready house, while others want to take on the challenge of a fixer-upper. I stand somewhere in between both camps as I love to live in a move-in ready home but have a fixer-upper on the side as my project (which is probably why I got into real-estate investing!).
So, where do you stand? If both houses ended up being the same amount of money, would you choose the move-in ready Fabulous Flip or the sweat-equity Wretched Reno?
Queen Stella prefers a clean house that she can make dirty herself, which is why our once move-in ready home is now filled with twigs, rocks, and mud. And we love it :)