House flipping is a Real Estate term that has certainly caught the attention of many people over the years. TV shows, seminars and books are lapped up by eager "want to be" home flippers, hoping to share in some form of phenomenal equity growth. On TV we see Bill and Susan, who have just managed to pocket $80,000, by buying a run down 4000 square foot home, fixing it up and selling it in 4 months. Seminars tell us how to buy "real" cheap, how to buy without using a cent of our money and how you can "flip" your way to paying cash for your own personal mansion.

What is House Flipping? Well, house flipping was a term that I first heard of back in the mid 80's, when house prices were skyrocketing. People were actually buying and selling "Paper", meaning that someone was able to buy a house on a Monday, and sell the Agreement of Purchase and Sale to another person on the Friday for a healthy profit. Other's simply decided to close the house deal and resell it immediately, realizing huge gains, thus "flipping it" did become popular. It was all about supply and demand.

When we look at House Flipping today, it's easy to say that the "hot, hot" market of the 80's is very much history and the Real Estate market has returned to it's own micro climates overcast by large scale national economic issues. Speculative real estate is still alive, but now it's more connected to new construction. The savvy Real Estate investor may decide to purchase a house or condo unit at preconstruction prices, for a completion date a couple of years down the road. Simply buying futures in the housing market.

So, where did the House Flipping market go? It morphed into a new path that I'd like to call "Home Renewals".  "Home Renewals" is the hybrid child of decorating and home renovations. It involves restorations, replacements, great planning, a good source of capital to fuel the project and it's a business that investors are becoming very keen on.

The Law of Substitution states that a consumer will not pay more for something when he can buy the same thing or better for less. If offered 2 identical houses, side by side, the cheaper one will sell first. Home buyers, whether they're First Time Home buyers or seasoned professionals, look for value, and considering that quality of life is so important to people these days, very few have a keen desire to live in a home under constant construction. Not only that, very few people want to be constantly digging into their pockets, searching for the next renovation dollar. When given the opportunity to buy the home which has been professionally updated and decorated, they will buy it, and sometimes even pay a premium for it. To them, paying a bit more in a mortgage is superior to paying less and having to finance and do everything themselves. Enter the Home Renewer!

Home Renewer's do not have an easy task. First of all they have to find suitable property to work with and the competition in this arena is always fierce. At anyone time, there may be at least a dozen home renewer's looking in a particular area of the City, waiting for that one property to come on the market. A Power of Sale? Perhaps an Estate Sale? Maybe an under priced listing? Within hours of a "home in need" coming on the market, straight faced Agents and their clients are scouring the premises. They all know the game and they have all come prepared. Most are able to assess almost instantly. A kitchen at $6,000. A roof at $2,000. Windows at $8,000. Electrical at $4,000...and on and on it goes. The hard costs and the soft costs are quickly added up, a resale price is determined and offers are prepared. One by one the offers stack up. Cash...quick closings..as is....everything that a seller of a vacant house could ask for.

The Home Renewer with the highest bid usually wins...but the job has just begun. Now, he or she, must produce a product that will provide a positive return and in today's market that means an incredible product. Nothing can be overlooked, and nothing can be left undone..and they can be guaranteed that their work will be thoroughly inspected by the Buyers independent Home Inspector. They must work smart and fast, because every day bites into the profit margin. Newbies may very well end up with a 6 month project, donating a good portion of their profit to carrying charges, whereas the Experts are in and out in 2-3 weeks. From my experience, the average Home Renewer in Hamilton is estimating a $10,000 return per unit, which really isn't that much, considering the scope of the projects they're undertaking and the amount of capital they're putting on the line. They have a vision for these homes, breathing new life into them, when the majority of people see nothing more than an endless money pit.

Everyone benefits from Home Renewals. When homes are given a new lease on life, they become assets to the neighborhoods they're in. The Buyers who are lucky enough to buy one of them, not only gets a home that they can comfortably live in for many years, without breaking their back or cheque book..they can get a house that they proudly call "Home"!