Making a business out of property flipping.

Anyone who owns a television must have noticed the recent serge of programs about people who buy properties, fix them up and quickly resell them for profit. If you are the handy type or if you have an entrepreneurial spirit, the idea of flipping a property for a fast return on your investment probably has some appeal. However, you may also be wondering how this scenario might work for the Canadian real estate market.

If you would like to make a business out of buying and selling property, there are many different ways to go about it. Most people trying it for the first time will want to keep their existing job, at least while they are getting started, or if you are just thinking of flipping as a sideline to supplement your usual income. The most profitable way to flip a property is to have that home be your principal residence, so that you can avoid paying capital gains tax on any increased value you achieve on the property. Appreciation on your principal residence is not taxable. Therefore, if you are prepared to live in the property while you improve it and cope with the disruption and inconvenience of renovating while you are living there, then this option is likely the best one for you. If you plan to own more than one property at a time, talk to your lawyer or tax advisor before you buy. It may be more advantageous to put the title under a different name, for example that of a spouse or another family member, to avoid paying unnecessary tax.

If you are planning to buy a home for a quick return, make sure you share all your goals with your real estate professional. They can counsel you on what areas are up and coming and stand a good chance of appreciating at a higher than average rate. They are also experts on what home buyers are looking for in a home, so they can advise you on what improvements are likely to give you the best return. Kitchens and bathrooms are the two rooms of the house that generally give you the best bang for your renovation buck, but there are countless options to consider.

Remember that market changes will reflect you are planning. Canadian property values are expected to continue to rise, but the growth rate is expected to be more moderate than the double-digit price increases we have experienced in recent years. The national average increase in house values that has been predicted by the Canadian Real Estate Association is 6%. Some of the best increases are expected in Western Canada, so that means some markets in other areas of the country will see even more appreciation that is modest in value.