74 ~ Friday, May 5, 1989 - North Shore News HIDDEN COSTS DON KLASSEN Res: 985-8944 FIVE-YEAR-OLD Michael Wilkicson (left), Tiffany Michalak, 4, (centre) and Jay Michaluk, 7, convert the handrail at Lonsdale Quay into makeshift monkey bars. Jay and Tiffany’s mom Shelly gives a hand. BAY CITY REALTY INC. Y86-4371 HERITAGE HOME If you like character homes, this is the one of the finest available! Loads of special charm from ithe old front porch, the oval glass in the door, the gleaming -soft- wood floors right up to the totally modern gorgeous city view. Phone me now to see! DON KLASSEN REAL Estate NEWS photo Mike Wakefield MANY PEOPLE look for quick profits buy- ing and renovating houses and putting them back on the mar- ket for a quick flip. By ANNE DROZE, FCA Contributing Writer But when is a profit real or simply an illusion? In- come tax aside, the profit won't even be illusory if you are forced to sell for less than you paid — even if you did nothing to the house. Failing that worst case scenario, other costs can sneak up on you and ruin those dreams of quick and easy profits. Some of the costs are: financing, costs, survey costs, or the costs of holding a property longer than planned. First, let’s took at financ- ing. Most flippers don’t pay “all cash’’ so they face fees for a mortgage. These range from a $150 appraisal fee, to a mortgage broker's fee of $2,000 or more. If you have a steady in- come and borrow from a regular lender, you’lt pay a lower fee. If your income is uncertain and the house is the only security you have, you may have to go to a more costly mortgage broker. Then there are survey Speculator’s profit on flip often illusion costs. If you bought without asking the seller for an up- to-date survey, you may have to pay for one to satis- fy the mortgage company. Or the person you are selling to may insist on a current survey. Whatever the reason, @ survey can cost about $700. Holding costs can mount up. Perhaps the renovator estimates the job will take five weeks. You allow a week for cleaning up before putting the house up for And your real estate broker assures you the house will sell within a month and close in 60 days. Adding it all up you estimate interest on the money borrowed to buy and renovate on the basis of 444 months. However, it might not work out that way. Suppose the renovator takes 12 weeks. And say it takes three months to sell the property and you wind up with a 90 day closing. Now you face nine months’ interest instead of 4%. Failing to plan for such events will see paper profits vanish. To sum up, you should consider all the costs of buy- ing and renovating 2 proper- ty along with a realistic estimate of what you can sell it for. Then and only then will you know whether the profit is real or an illusion. in hice licurioush y pointed a 2 Bedroom Der waterfront suite 985-8944, 986-4371 7 ner te constr uction J Panoramic ONE BEDROOM — $69,900 cine <> Great location and features: pleasant SUPER TOWNHOME westerly outlook plus gas fireplace, in-| Top condition, light and bright on 2 unit laundry, dishwasher. Spacious liv- | jevels, with 2 full baths. Patios front and } ing areas, small bedroom area, total of] back for summer relaxation! Easy to 612 sq.ft. Phone now to see. view, just phone me. DON KLASSEN DON KLASSEN 985-8944, 986-4371 985.8944, 986-4371 For a free market evaluation, call our HOMELINE 986-4371 (24 hrs, 972 Marin: Drive, North Vancouver