How I flipped my $90,000 house into a $210,000 investment

In 2020, the pandemic had just started. The law school I was attending sent us all home, and I went back to rural Nova Scotia. I got a job in the middle of absolutely nowhere, and was told housing would be ‘challenging’.

That was the understatement of the century.

There was absolutely nowhere to live.

As has become a common refrain in the months and years since the pandemic started, housing is at a premium, and finding a place to rent (let alone one that is in a convenient location and isn’t gross) is a major difficulty for thousands of people. The housing crisis has only gotten worse since May of 2020 when I was looking for a place to live, but at the time, in rural Atlantic Canada, it was still a rough go. There were no rentals.

Let’s buy a house!

So I started to look at houses to buy. I was in a beautiful part of the province, and I (and the rest of Canada apparently) had decided to buy property. I would go out to tour houses (not that there were many in my very low budget) and realtors would tell me they were selling everything they had to people from Ontario and Alberta. Nova Scotia was closed to visitors, so these folks were buying houses without ever setting foot inside them – nor within the boundaries of the province.

After making a lowball offer on a house and being rejected (twice), it was seeming more than a little futile that I’d ever find a place. I was living in AirBnBs that were costing way more than I was making in income and the whole situation seemed poorly thought out (and it probably was!).

A colleague turned me on to a private sale that was posted on social media. The house had a tiny ‘for sale’ sign out front, and was occupied by tenants. I went to see it on a whim and felt confident I wouldn’t be buying it, so didn’t spend much time absorbing its features.

Several weeks later, having still found nowhere to live, I called back the people with the private sale. They were asking $90,000 for the house, which came with a shed of sorts and half an acre of land. I debated offering a lower amount, but honestly didn’t have time to negotiate. What I needed was unoccupied possession of the property within mere weeks – not the month or two most deals come with.

They agreed. We had a house deal!

What were the costs to buy?

I did not want to pay for mortgage insurance from CMHC (Canada Mortgage and Housing Corporation). They require that you have insurance if your down payment is less than 20% of the purchase price.

On a $90,000 house, a 20% down payment was $18,000. The property deal required a deposit of $1000, which was eventually applied to the purchase price. I also had to pay for a home inspection, which came in at $488.75. The cost for a lawyer to review the deal was a little more than $600. Because it was a private sale, and neither myself nor the seller had a realtor, we did not need to pay realtor fees (which are usually about 5% of the purchase price).

That left me with a mortgage of $72,000, which worked out to $150.36 every two weeks.

Although I had to pay lots of expenses up front (the lawyer, the deposit, the down payment, and the inspection), paying about $300 a month in living expenses was nothing compared to the $1300 or more in rent that was common in major centres.

So, how did you go from your $90,000 purchase, to a $210,000 winfall?

My initial investment was $90,000, plus taxes and fees which brought me to $92,192.71 plus the services listed above. Two years later almost to the day I sold that same house for $210,000.

First things first – the market helped. I bought the house at a time when yes, the market was definitely hot, and it wasn’t a good time to be a buyer, but it was a funny house in a funny location so I got in at a good spot. In the two years that followed (spring 2020 – summer 2022) the market across Canada went wild. Houses were selling well above asking, interest rates were super low, and people were buying like mad. I didn’t sell at the peak of that hot market, but I didn’t totally miss the moment either. So that’s just luck.

Beyond that, when I moved into the house it was a bit of a mess. It had been home to several rounds of tenants, so hadn’t been cared for the way an owner-occupier would. Some critical things needed doing straight away – the front window was cracked, other windows needed replacing, and the appliances were struggling.

The house was a 1970s bungalow, with two small bedrooms on the main level, and three additional bedrooms in the basement, plus a storage area and sitting room downstairs. Originally, there were two bathrooms on the main level – one off the living space, and one off of a bedroom (sort of like an en suite but that might be generous). The main bathroom was tiny – you could walk in a small circle but that’s it – and had the largest bathtub I’ve ever seen. It was also entirely walled in unfinished wood paneling!

Renovations: The House Flip

It was clear from the first day I moved in that some work needed to be done. The window, obviously, and the kitchen was a bit of a mess. I started tearing out cabinets that had obviously been added ad hoc by a supposedly handy occupant of the house. The previous tenant had been the proud owner of some kind of bird which had left its mark over… everything, so that was a fun surprise. And then there was the entry to the main living space, which in two square feet had not two, not three, but four doors – some of them at angles to each other.

It was the peak of construction season though, and there was no way a contractor was going to do any work on my house until the fall. I worked on some of the easier fixes – tidying up the garden, tearing down the old shed at the back of the property, and replacing the appliances.

At the end of the day, another $63,000 was put into the house to make it livable. I wasn’t planning to flip it or sell it – I had a job and wanted to live in the house for the long term. I made choices about appliances, fixtures, and fundamentals like lighting based on my desire to like where I lived.

Had I been flipping the house with the intention to just resell, or to have tenants, I likely would have made different decisions. There could have been small savings on things like appliances, or fixtures. But big things still needed to be done. About $10,000 had to go into electrical work off the bat to deal with old fuse boxes, upgrading panels and wiring, and adding pot lights throughout the space. Luckily, I didn’t need to touch the basement except a coat of paint we had lying around, and the main level was only 900 square feet, so individual costs for things like flooring and paint could be kept low.

The whole renovation took far too long. Electrical work was started in the fall. Nova Scotia has an efficiency program to help homeowners make upgrades to insulation and other features that improve energy efficiency, so I was able to take advantage of some of those and receive a rebate on windows and doors, and free insulation in the attic of the house. True construction took several months, and it was not until about March of 2021 that the workers were essentially gone, and the house was liveable. But what a change!

We converted the second bath (the ‘en suite’) to a full laundry space with stackable washer-dryer. This wouldn’t have been everyone’s choice, but having the laundry upstairs and out of the basement made it way more pleasant, and the whole house became fully accessible on one level which was a bonus.

By summer, a new deck was added and the landscaping was finished. The property already had several apple trees which bloomed in spring so it didn’t need too much additional work.

Becoming a Landlord

The following year, my job changed, so I got tenants in the house. Read more about becoming a landlord here. At $950 a month, I was bringing in three times the monthly mortgage payment and earned $10,450 in the course of the 11 months that I rented out the property, with only $3300 in mortgage costs in that same time. I also paid property taxes, which were relatively low in rural Nova Scotia – about $500 for the year.

Then in the spring of 2022, the market still going strong, I decided to list the house for sale. It didn’t really bother me if it didn’t sell; I was happy to have tenants, and the area needed rental properties. But the market was going to cool eventually, and if I could get my money back out of the house, this would be the moment!

At the end of the day, I managed to sell it for $210,000. After paying out the remaining mortgage ($68,000) and the fees for realtors (5%), lawyers, and all the rest, I took home $130,726.16 from the sale. That, minus the $63,000 that was put in for renovations, and I pocketed about $67,700 in profit.

Of course, two caveats should be mentioned.

One – there were other expenses. Things broke while the tenants lived in the house; $1300 went out the door to replace the water tank. The lawn needed to be mowed, and the snow shoveled. Stuff costs money. It was also hugely time consuming for me and my family to get this done. The labour cost for us alone would be wild. This was not a small project, and I had to live in the house throughout the renovation which was very little fun.

Two – I never set out to buy, renovate, lease out, and then sell this house. Had I planned to do that, some things could probably have cost less (though others could have been more!). Living rurally, during an international health crisis and an supply chain problem, added to certain costs for materials. The pandemic complicated getting supplies, getting workers, and just generally getting the job done. This was by no means a smooth, well thought through plan. It just happened to work out. I got lucky.

Certain things worked really well though. I chose modern fixtures, stainless steel appliances, and funky colour schemes for the house. This made it stand out when I eventually went to list it.

The layout of the house made it really easy to keep clean for both me and the tenants, which meant it showed well when it was listed.

Nothing was so fancy or expensive, but having high quality lighting and good storage made a big difference in a small space. A simple Home Hardware kitchen was not a high priced item, but made such a huge impact.

All in all, a $67,000 take home after living in the house for a year, renting it out, and renovating it is a pretty good deal since I didn’t mean to do any of it in the first place.