investments · real estate


Householders renovating house


Purchasing a home, working hard and fast on some marketable renovations, and then re-selling the property can add up to some tidy profits if done quickly and correctly. If you’re interested but don’t have the funds to purchase a property outright in cash, read on for what you need to know when financing a flip!


[An amazing purchase price in a marketable area] + [staying on budget]

+ [speedy renovations] + [firm sale] = PROFITS


  • Investment properties always require a down payment of 20% or more.
  • Your everyday Bank won’t give you a mortgage to flip a property.
    • “A” Lenders and Banks make money on the interest charged on your loan so they want to lock in your loan for as long as possible. A “flip” requires fast money in and out so most Lenders find them higher risk for minimal profits and refuse to fund flips.
  • Most Lenders will usually only lend on current value of the property (not the improved value).


  1. A good Realtor:
  • Who can help you find a home with the potential to sell for much more (ie. foreclosures, pre-foreclosures, expired listings, motivated sellers, homes with less curb appeal, etc).
  • Who can provide valuable advice on which renovations might make that property more marketable for that particular location.
  1. A good Mortgage Broker:
  • To make sure your financing is in order so you can go shopping and be prepared when you find that perfect property to jump on!
  1. A good General Contractor or tradespeople to help you with your renovations when needed.


  • You cannot purchase an investment property with less than 20% down.
  • That said, one of our Private Lenders will lend up to 80% of the “after repaired” value of a property.
  • If the [“after repaired” value] – [the purchase price] is equal to or more than 20% of the purchase price, this Private Lender will finance the purchase with a minimum of $10,000 down!
  • This minimum of $10,000 down payment is required to show you have skin in the game.
  • Aside from your down payment, you must have capital for the renovations or access to the amount of money needed via room on credit cards or lines of credit.
  • You must also have enough funds or prove enough cash flow to cover the interest only costs of your mortgage from the time your purchase closes until the time the property sells.
  • The typical interest rate for such a loan with this Lender is 15.5% but this interest rate can be reduced if you have more down payment than the absolute minimum required and loan payments would be interest-only and, therefore, more manageable.
  • This Lender also charges a 3% Lender fee to process an application BUT this fee can be added into the loan if it there is enough room between the purchase price and the after repaired value.
  • BONUS: Turnaround time for an approval with this Lender is usually within a day and they can even work on an application with you BEFORE you submit an Offer. This means that when you are ready to submit your Offer, you can go in with no financing condition!

People renovating the house



  • Purchase price of $300,000
  • Expected sale price of $395,000 after upgrades to kitchen and bathrooms, a fresh coat of paint, and a thorough cleaning of the property
  • [“As improved” value] [purchase price] = $395,000 – $300,000 = $95,000
  • The above about 24% of the purchase price (therefore more than 20% down)
  • Down payment required from Buyer of $10,000
  • Renovation budget of $25,500
  • 3% Lender commitment fee of $8,700


  • Loan amount needed = $300,000 (price) – $10,000 (down) + $8,700 (3% fee) = $298,700
  • Interest rate of 15.5%
  • OPEN term of 6 months – Fully open so no payout penalty!
  • Interest only payments of $3,761.65/month


  • Actual sale price of $387,000
  • Purchase date to sale date – 123 days
  • Total approximate costs of $15,423 (interest charges) + $25,500 (reno costs) + $10,000 (initial down payment) + $8,700 (Lender fee) + $11,740 (Realtor fees) + $2,000 (Legal fees for purchase & sale) = $73,363
  • NET PROFITS = $387,000 (sale price) – $298,700 (loan) – $73,363 (total costs) = $24,937+ in just over 4 months!


  • Initial down payment + interest costs for 4-5 months (can also show the means to pay interest costs after a few months) = Less than $20,000
  • PLUS the reno budget of $25,500 can be a combination of saved funds, room on credit cards/Lines of Credit, and/or funds from a family member or investment partner
  • PLUS enough funds to cover legal costs for the initial purchase PLUS utilities, taxes, possible condo fees, and other maintenance fees during the flip process


  • Make money on the purchase!
    • Make a plan and be ready to act fast and close quickly.
    • Check Titles for Builders Lien, Writs, CLP, Tax liens, condo fees.
    • Look for foreclosures, expired listings, or homes with less curb appeal.
    • Buy in communities with lots of turnover – Inventory of 3 months supply or less is a good sign.
    • Solve someone’s pain – They’ll be more motivated to sell.
    • Always be searching for good deals (MLS, for sale by owner sites, door knocking).
  • Stick to your renovation budget and a quick renovation is best!
    • Consider your timeline to renovate and how long it will take to sell.
    • Best to aim for a 3 month flip – 2 months to renovate and 1 month to sell.
    • Look for large discounts for renovation costs (store credit card offers, etc).
  • Neighbourhood:
    • Be aware of what the top home sale prices were in the area
    • Don’t renovate above the community standard
    • Don’t base the valuation of your property on active sales that are 6 months or older
    • Price to SELL – Don’t shoot for the stars.
    • Try to compare your property with recent sales in the same neighbourhood that were also renovated.
  • Some of the most important aspects of a property to consider when comparing yours to another are:
    • Date of sale
    • Lot size & building size
    • Design, room count, basement, parking
    • Age/condition
    • Upgrades and yard development


Even with higher interest rates, lower cash requirements to start can allow seasoned flippers to potentially flip multiple properties at the same time.

Also, you don’t have to flip a property and then sell. You can flip and then refinance the mortgage with an “A” Lender at the NEW appraised value and keep the home to live in or to rent out.

Finally, at the end of the day, when purchasing an investment property always keep in mind that the initial costs aren’t all that’s involved. Make sure you have a back up plan in case renovations end up taking longer or the rental goes vacant for a few months or something like the furnace breaks down. It’s always best to be prepared.

Want to learn more and test out some scenarios that are more tailored to your situation? Reach out today!

If you have questions about renewing or refinancing an existing mortgage OR qualifying for a new mortgage, please do not hesitate in contacting me at

780-863-0700 or

Remember, call Minn for MINN-imum Stress, Maximum Service.


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