In recent weeks, real estate agent Max Verity has been part of several residential sale negotiations with multiple parties dealing on the same property.

In one instance, the house sold for $15,000 above the asking price. He's also seen newly renovated houses sit on the market for weeks and he's been privy to conversations where investors talk about how the market doesn't know what it's doing.

So what makes one home hot property and another as cold as ice? Market research and hard work, says Verity, who's with Maxwell Westview Realty.

Although he didn't expect it to be the case when he started selling homes three years ago, Verity's business includes a lot of investors. "I would say that 60 per cent of my business is investors," he says.

Dave Olecko, Business Edge
Denise Hamilton, left, and Joni Pypers put in the hard work on renovations, and it has paid off.

His clients range from those in the market to buy commercial multi-family properties to hold and manage, to "your average Joe, who's looking to renovate and flip and sell a property."

Investors Denise Hamilton and Joni Pypers are relative newcomers to the real estate investment market. Building on a business relationship honed at Hamilton's Calgary-based publishing company, the mother-daughter team bought their first property in the northwest community of Highwood in 2004. The duo paid $199,000 for the property and added $15,000 in what Hamilton describes as "mostly cosmetic" renovations, particularly to the kitchen and bathroom.

The reno took about two months to complete, after which Joni and her soon-to-be husband moved in for about eight months. It took them a couple of weeks to sell the property - which went for $250,000.

A few months later, they bought a suited duplex in the southeast, immersing themselves in their first taste of what Hamilton now describes as a kind of "mother-child" relationship with tenants. They say they've had good luck with finding what the industry describes as "quality tenants.”

But even though the property nets $500 a month in positive cashflow, it's not easy money, says Hamilton.

She admits to fielding almost daily phone calls from one of their first tenants. And neither of them can say enough about the value of checking references and asking the right questions before anyone signs on the dotted line. That's how they learned the "new puppy" one prospective tenant wanted to get was actually a pitbull. Although they were prepared to compromise their no-pet policy for a quality tenant, the pitbull cost the deal.

In February of 2005, their company bought a third house in Bridgeland. Built in 1910, it includes a garage, another dealmaker for Hamilton and Pypers, whose market research shows a garage can sell a home. The place needs a lot of work, but the investors are convinced they paid an undervalued price because "it's ugly."

When the home inspector deemed the building structurally sound, Hamilton and Pypers moved fast. They bought the property and dug out their workclothes to take part in what's turned out to be one of their favourite tasks - demolition.

It's too early to say if their latest project will make money. But Verity, who's worked with Hamilton and Pypers in the past, expects it will. He says the two have a "good eye" for property. He's also convinced they do their market research - and the requisite follow-through in terms of quality.

Where do other investors go wrong? "They cut corners," says Verity. "They buy the cheapest materials ... they ask top money for a mid-range product.”

He sticks to the real estate maxim that says kitchen and bathroom renovations can make a sale profitable.

Wise investors on the buy-and-flip market also know they can't buy what Verity calls "cheap white appliances.”

Nor should they renovate and install two-inch baseboards when most of today's homebuyers will value a four-inch product.

He recommends investors develop a "power team" that includes a lawyer, mortgage broker and a knowledgeable agent, all of whom are prepared to move fast when a hot property beckons. Good agents will also provide honest advice about what makes a sale and they'll help set a competitive price because they realize that borrowed money costs investors every day a house sits on the market.

Verity has seen people do a poor job on a renovation, price the product too high, then pare $10,000 or more from the asking price just to make the sale. These same investors often leave real estate investment after a single deal. "There are so many people in this city that would peg themselves as investors. There are very few that do it well," says Verity.

Back in Bridgeland, Hamilton and Pypers are following an investment strategy that works for them. Their first renovation gave them some experience hiring trades, and they stand by a policy of contracting tradespeople they've been referred to by family, friends and others in the business. With the help of their husbands, they'll handle much of the demo work and some of the finishing work such as painting.

They'll also nourish ties with people such as Verity, who can lead them to other deals, but keep to an investment strategy that's slow and cautious. That means letting deals go if they can't negotiate their price, and it means keeping their portfolio manageable in terms of their financial and time commitments. "You could say we're patient," says Pypers. "But we're also just very picky!" (Joy Gregory can be reached at joy@businessedge.ca)