Before and After: a behind-the-scenes look at what it takes to buy, renovate and lease an income property
Home renovation TV shows have made “house flipping” shorthand for turning a hasty reno into an easy payout. The reality is a lot more complicated
The Story: Realtor Aleksandra Oleksak purchased her first home with a girlfriend at age 25. With help from her mom, a veteran realtor, the girls beat out nine other buyers to win the property, which they then renovated and sold. Oleksak was hooked. Soon after, she left her job in the fashion industry, got her real estate license and completed four more renovation projects. Last year, the 30-year-old decided to acquire an investment property. “I don’t believe in RRSPs,” she says, “I believe in real estate.” Oleksak wanted a house that would provide rental income until she was ready to retire, when she would renovate it once again and sell.
The Buy: Oleksak was searching in the west-end when a friend told her he was selling his three-bedroom townhouse in the Junction Triangle. After making sure the house was structurally in good shape, she bought it privately for $420,000. Oleksak put down a hefty down payment to ensure a positive cash flow after paying off monthly expenses.
The Renovation: With her ideal renters—a young, professional couple—in mind, Oleksak began what she hoped would be a month-long renovation. She set a conservative budget of $10,000, which was quickly adjusted to $15,000. One of the major decisions: how to unify the hodge-podge of parquet, tile, linoleum and original hardwood flooring. Laying all new floors seemed like a waste since she planned to renovate again as she neared retirement. When staining didn’t work, her realtor boyfriend suggested they try paint instead. Initially skeptical, Oleksak was pleased with the final results. She was less happy to find out that the upstairs bathroom had almost no water pressure. A plumber delivered the bad news: the waterline coming into the house had corroded, which added an unexpected $2,300 to the bottom line. In the end, the renovation cost $26,037.62 and took two months to complete.
The Sell: Oleksak staged the house and offered the option of renting unfurnished for $2,750 a month or furnished for $3,000. Though she received several applications right away, she decided to hold out for her ideal renters: an executive couple. Three and a half months later, the wait paid off. A husband and wife, both doctors from the U.S. expressed interest and, because they were exactly the renters Oleksak was looking for, she gave them a deal on the rent. They took the house unfurnished for $2,650 a month.
By the Numbers:
• Cost to buy: $420,000
• Months of construction: 2
• Cost of renovations: $26,037.62
• Reno cost overrun: $11,037.62
• Time to find tenants: 3.5 months
• Rented for: $2,650/month plus utilities