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8 Bathrooms or more
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7 Bathrooms or less
8 Bathrooms or less
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$100k or more
$125k or more
$150k or more
$175k or more
$200k or more
$225k or more
$250k or more
$275k or more
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$325k or more
$350k or more
$375k or more
$400k or more
$425k or more
$450k or more
$475k or more
$500k or more
$550k or more
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$650k or more
$700k or more
$750k or more
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$3.00m or more
$3.50m or more
$4.00m or more
$4.50m or more
$5.00m or more
No Maximum
$100k or less
$125k or less
$150k or less
$175k or less
$200k or less
$225k or less
$250k or less
$275k or less
$300k or less
$325k or less
$350k or less
$375k or less
$400k or less
$425k or less
$450k or less
$475k or less
$500k or less
$550k or less
$600k or less
$650k or less
$700k or less
$750k or less
$800k or less
$850k or less
$900k or less
$950k or less
$1.00m or less
$1.10m or less
$1.20m or less
$1.30m or less
$1.40m or less
$1.50m or less
$1.75m or less
$2.00m or less
$2.50m or less
$3.00m or less
$3.50m or less
$4.00m or less
$4.50m or less
$5.00m or less
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Toronto Home Flippers, Get Flipped!!

While the Toronto real estate carries on its ever-increasing value through limited supply and plentiful demand, future homeowners are not the only players in today’s market having trouble finding economically friendly properties. Infill developers known as ‘flippers,’ are challenged with the same issue finding it difficult to turn a decent profit in the current trend of inflated prices. The increased prices are beyond just the effects of supply and demand; they are driven past their original value through the mass of naïve homebuyers and the bidding wars they bring to the Toronto housing market.

In Toronto the average selling price for a home has increased by more than $100,000 in the course of a short three years, the mean price for homes has risen from an average of $465,369 in September 2011 to as of last month $573,676. When flippers plan to completely restore and renovate a house in downtown Toronto they have to add their projected expenses onto their original buying price; upon which they hope to create a positive difference between their expected selling price and their combined expenses.

For example, a property development company, let’s call them the Toronto Home Flippers, plan to buy a $750,000 downtown home. This example of a company makes professional and experienced calculations of what it will take to fix up the century old home for the modern market. Considering that this company plans to gut the entire house, updating its entirety, they expect to spend a total of $200,000 to $250,000 on renovations. The make-believe company plans to sell the downtown Toronto property at a grand total of $1.25 million. Subtracting their total expenses from their total sale the developers calculate to make a $250,000 profit for several months of work, of which this profit is split amongst their staff of trained and professional trades.

The above company the Toronto Home Flippers and the above example are a simple representation of Toronto’s professional flipping companies and the perfect world scenario for a flipper. With such a saturated demand in the Toronto housing market homebuyers are driving these prices into unsustainable values for any house flipping company, especially for Toronto Home Flippers. 

The example $750,000 Toronto home in most cases would not be directly sold to flipping companies or any buyer on a first come first serve basis, but would become the setting for a bidding war. The example property is hypothetically bid on by the Toronto Home Flippers for a total of $800,000, a reasonable and calculated amount that allows them to still profit between $200,000 and $250,000. But truth be told we don’t live in a perfect world, and the honest bid of the Toronto Home Flippers will not be enough. With the mass of potential buyers, this price is driven up by more uneducated amounts of money. A passionate upgrading home-buyer, a newbie flipper or a freshman buyer puts an $825,000 bid on the property, but another couple of bids inflates its value to a selling price of $950,000. 

The bidding price for the Toronto house example is an extra $150,000 than the Toronto Home Flippers planned to invest. Bidding past this value would lose them a large amount of profit leaving them with anywhere from $50,000 to $100,000 after they successfully sell the updated property and house. This profit range is not manageable for the Toronto Home Flippers and the company is left to abandon any future plans concerning the property. 

The problem is not solely this example incident, but when this is the reality of nearly every home sale in the city for the past couple of years. Some of Toronto’s professional flipping companies have been without work for months at a time due to this rising reality in Toronto’s real estate market.

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Email:
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Sales Representative
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samkamra@yahoo.com

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