TORONTO – The changing real estate market hasn’t deterred celebrity investor Scott McGillivray from home flipping.
If anything, he says a sales slump and tougher financing rules can make this a great time to make money.
“The truth is most of the money made is buying in a low market, sort of seizing opportunities when no one else knows or see that they exist.”
And so the popular television host has shifted from guiding rookie landlords to guiding newbie flippers with his new HGTV series, “Buyers Bootcamp.” In each episode, the seasoned investor teams up with wannabe moneymakers to help them buy a property, renovate it and turn a quick sale, ideally earning a profit.
But this is risky business, and it doesn’t always end well.
McGillivray admits at least one of the deals ends with a loss. Various delays meant three renovations fell behind schedule, and the homes still hadn’t hit the market as he promoted the upcoming premiere.
“Not every house does what you want it to do. Some of them don’t sell, some of them sell really well, and not every house is a flip — some of them are buy-and-hold,” he says, referring to the lease or rental of a property that doesn’t sell fast.
“There are different endings to different episodes. I always say, ‘This is real life and you can hope for one thing but you’re not always going to get it.'”
McGillivray, best known for his long-running series “Income Property,” prefers to keep the big picture in mind: “As long as you’re making money most of the time, you can kind of manage through these ups and downs.”
For his inaugural season, McGillivray rolls the dice on 10 properties, sharing the profits and losses with newbie investors. But he admits he stayed out of Toronto, where he says red-hot bidding wars have given way to fewer offers, and a more balanced market.
Most of the investments were in the Greater Toronto Area, including Orillia, Barrie, Guelph, St. Catharines, Hamilton, Oshawa, and Peterborough. But he also turns to properties in Florida and New York state, believing it’s more lucrative to invest in the United States than most Canadian cities.
“When we knew the GTA numbers weren’t going to be working, we went to Buffalo where we could make lots of money and we could buy houses for $25,000, $35,000 and still make a $100,000 in profit in six to eight weeks,” says McGillivray, who also sees good pockets in Canada.
“I’ve been investing outside of the GTA, I’ve been investing in Alberta. I think Alberta has some good opportunities, and the Maritimes as well.”
McGillivray’s new show enters a subgenre already well-represented on HGTV thanks to other flipping series including Kortney and Dave Wilson’s “Masters Of Flip,” which just launched its third season.
If flipping houses looks easy on TV, the husband-and-wife team insist it is not.
“You become used to the challenges that are going to arise but trust me, every house that we do, even though we’re over 100 houses in, brings yet another new challenge,” says Kortney Wilson, born in Windsor, Ont., and raised in the Ontario cities of Sudbury and Kitchener.
Dave Wilson, born and raised in Ottawa, says interest in flipping has increased considerably where they work in Nashville, making it a much more competitive market. He admits it’s partly the fault of TV flippers like himself.
“A few years ago in Nashville we could find 10 houses to flip very quickly. Now it’s a little harder — there’s more house flippers, there’s more TV shows, there’s more investors coming in from other countries and other states.”
And that can mean fewer available homes to flip, higher home prices and tighter margins. That all adds up to greater risk for everyone involved, and he cautions viewers considering the leap to plan carefully and assemble a knowledgeable team.
The Wilsons are in a unique position because Dave is a builder with established relationships with contractors and crews, while Kortney is a real estate agent with access to listings before they officially hit the market.
“We can negotiate better prices and then having her also design them, we usually negotiate higher prices on the back end,” says Wilson, noting that advantage allows them to be more profitable than some others.
McGillivray, meanwhile, is a licensed contractor with years of experience in the rental market. He stresses the importance of finding the right neighbourhood and doing “the right renovations” to get maximum value from the flip.
“I find a lot of investors, they get excited, they get a property and then they’re like, ‘OK, I only have $5,000 to renovate it,'” says McGillivray, who has been investing since 2000.
“I’m like, ‘$5,000 to renovate it?’ I say, ‘We can’t add value for $5,000, we need to do this, that and the other thing and we can make a lot more if we do it right.'”
And if things go sideways, have a plan, he says.
“Typically I’ll flip properties that I also know are good rentals and that way if there is a change in market conditions, like in Toronto … I know that these properties would be good rentals.”
“Buyers Bootcamp” with Scott McGillivray premieres Sunday on HGTV Canada. The third season of “Masters Of Flip” airs Wednesdays on HGTV.