In Real Estate, there are multiple ways to make money as it is a tangible asset that offers opportunities for consistent cash flow through rental income. This allows property owners to hold onto the property, giving it time to grow in equity value over time, which happens with the market's behavior. With the Canadian economy being driven by immigration, Real Estate will become even more prime with time.

The Fix and Flip strategy involves buying a Real Estate asset that needs work but has potential to become an appealing asset due to its location, outlook, or layout once the remodeling is completed. This strategy is not focused on holding the property for rental cash flow.

While this strategy may seem straightforward, there are several reasons why Fix and Flip real estate works.

Less Buyer Competition
The ideal Fix and Flip property would need major work, which means there will be less competition for such properties. Standard Real Estate consumers are looking for properties that do not require any work, as their intention is to take lending from financial institutions and contribute their down payment. Once the property is purchased, they do not have investable money to perform updates. This is the reason why the Fix and Flip category works, where the buyer completion becomes less or negligible. In Real Estate, especially in this investment strategy, you make money when you buy. Therefore, your purchase price should include your investment and future potential to realize.

More Negotiation Room
With less interest in the property's current state, there is more negotiation edge for the buyers. This is where the potential for Fix and Flip exists. The current state of the property gives an opportunity for the buyer to close the sale at a credible price, allowing for updates and a payback for the sweat equity put into the whole process. The discounted purchase price is the prime benefit and key to a successful Fix and Flip strategy. If the property purchase price is incorrect, it will leave no room for benefit in this investment category, and one needs to be mindful of this.

Demand for Ready-to-Move-In Properties
Buyers are always looking to move into Ready-to-Move-In properties. Once the renovation and remodeling are complete, there is a huge chunk of buyers who are willing to buy the Real Estate asset. Quality workmanship and materials utilized in the remodeling attract buyers to the property. As they are now updated and require no investment for renovations, this encourages buyers to provide a worthy price to the seller. In a market with low inventory, this demand becomes even more pronounced for moving-ready nicely updated properties.

Short Term Investment
The Fix and Flip investment strategy is a short-term approach in Real Estate but is capital-intensive as it requires on-hand cash to do quality finishes and updates once the property is secured. The investment period is short, allowing the investor to move on to the next project without losing the opportunity cost in the market. If timed correctly, the upside potential on a Fix and Flip asset becomes even more. In the constantly changing Real Estate Market, when the market is at a low, the properties needing work can be negotiated at an even better price, by the time renos are complete if the market supports the upside is compounded. 

Quality is the Key
In the fix and flip investment strategy one needs to ensure that they utilize highest quality material and workmanship in the remodelling and renovation work. The benefit of this strategy will only work with highest quality taken care in the updates. If the work is average or materials used are poor to make money, this will not help as the buyers again will try to low-ball and would not want to give you premium you would have expected. 

In Real Estate be it commercial or residential, the money is to be made when the usage and current state is updated for its highest and best use. The fundamental concept of upside potential is what investors leverage in Fix and Flip Investment Strategy. 

?Wish you all the very best! Reach out to our dedicated team at Elixir for any queries you have in Real Estate and we will do our best to help.


Mudit Mehta 
Broker of Record
ELIXIR REAL ESTATE INC.
Off: 416-816-6001 | [email protected]