Nicole and Barry Hemphill of Fusion Home Designs have been flipping houses in Calgary for six years: Mrs. Hemphill is an architectural technologist and interior designer, Mr. Hemphill is a contractor.
Their latest renovation, a three-bedroom bungalow on Winchester Crescent in Westgate, has been on the market for six months and, despite several price drops, interest in the property has been poor.
“The property is in a great area, a really desirable area for families, and we gutted it; it’s been a total transformation” Mr. Hemphill says. “We took down walls to give it an open-plan feel, we finished the basement, we added an ensuite, new electrics, plumbing, insulation, windows, doors. You name it, we did it.”
“We’re not in the business of ‘lipstick and mascara’ flips,” Mrs. Hemphill adds. “We’re not afraid to take down walls.”
The Hemphills bought the property in December, 2014, for $515,000 and initially put it back on the market for $745,000. It’s currently listed at $689,000 and they’re incentivizing potential buyers by offering to build a garage for the property in spring.
“It’s really tough right now,” Mrs. Hemphill says. “Eighteen months ago, we were getting multiple offers on properties within 24 hours. Now, there’s nothing.”
The couple are currently preparing to list their own home in Glendale in a bid to free up some equity and are taking an agile approach to their living situation.
“We have a few options,” Mr. Hemphill says. “We could sell the flip, we could sell our own house, we could sell neither and have to rent out the flip or we could sell both properties and free up enough equity to re-invest in three new fixer-uppers or rentals. There’s great deals to be had right now and we’d love to have the cash to move on it.”
Mrs. Hemphill admits she has a harder time with the uncertainty of their current situation than her husband. “Barry’s a lot more laid back than I am,” she says, laughing. “I’m more type A. But the market is fickle right now, so we have to be flexible. We just want to move on.”
Flipping in a fickle market is something property investor and agent Dave Bonk decided to avoid when he sold his last flip back in August, 2014.
“I started flipping in Calgary more than 10 years ago, but I’ve always moved in and out of the marketplace with the cycles of the economy. I got into flipping in 2005, got out in 2007, started again at the end of 2008 and sold up at the end of summer, 2014. Between times, I have rental properties and I help other investors but flipping isn’t something I’d want to be involved in right now.”
Mr. Bonk believes the market won’t be ripe for house flipping for at least another year, probably longer.
“Real estate typically lags behind the economy. The real estate market will keep falling even after we see an upturn in things like the oil price. After it’s bottomed out, that’s when it’ll become a flippers market again. There’s a lot of dreamers out there who see a great deal on a house to flip and go for it but equity is shrinking, you have to consider whether it’ll still be a good deal in 3 to 6 months. Real estate isn’t like stocks and shares, the fluctuations are huge.”
Dallas Crist doesn’t quite agree. The owner of Paramount Projects and Home Renovations has been renovating, consulting and flipping houses in Calgary for eight years. In that time, he’s sold more than 20 properties and has closed two sales already in 2016.
“The flipping market’s still there; it’s just tougher. You have to drop your price. I have properties valued at $700,000 and I’m putting them on for $650,00. You have to be decisive and move quick.”
Mr. Crist admits profits aren’t what they once were but remains undiscouraged, with one remaining property on the market and another coming on sale in the next couple of weeks.
“I’ve made $300,000 on an $800,000 property before but that’s not happening anymore in Calgary. That doesn’t mean flipping isn’t still viable. It just has to be the right price and the right product. Buyers are savvy, they’re shopping around, the new build market has a lot to offer right now; flippers have to compete with that and Home Depot flooring won’t cut it anymore.”
Mr. Crist’s latest flip made headlines in December last year when he offered a $150,000 Tesla car free with the $2.1-million home.
Like the Hemphills’ offer of a garage, the Tesla was a sweetener that’s becoming increasingly common in Calgary as sellers pull out all the stops to get their properties noticed.
Mr Crist’s property sold for $1.85-million (without the car), proving that standing out from the crowd is a good thing, but ultimately you’ve got to price it right to sell it.
“I took a hit on that guy for sure,” he concedes.
Undeterred, he’s already eyeing up his next move in the market. “We’re pretty fortunate in that we have contractors and access to high quality wholesale products like cabinetry. We also have employees live in the houses we flip and use them as show-homes for our services. It makes sense for me to keep doing it.”
But not all house flippers have the luxury afforded by the scale and diversity of Mr Crist’s renovation business.
Mrs. Hemphill believes the coming year will prove difficult for many in the industry. “It’ll be a case of who can wait it out; who can afford to wait it out.”Report Typo/Error
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