Cost To Flip A Property
I'm thinking of buying a house to flip and I have never done that before. I'm buying the house for 100 thousand and plan to do some minor cosmetics and upgrade the electric service all said and done the house should go for 135-140. How much should I expect to loose in fees and commisions to sell the house in the 135-140 price range? Also does anyone have any tips on a cheaper way to sell a house and save on fees?? Any help is greatly apperciated
:-D :-D
If you use a Realtor, expect to pay around 6% or $8,400 commission, add the 1% transfer tax and deed preparation and you are already at almost $10K. If you pay some of the buyer's closing costs, say 3%, that is another $4,200. If you borrow the $100k, the interest can eat up profit if you do not sell fast. Selling without a Realtor can save money, but if it takes too long to sell, the savings are spent on interest.
Here is a recent real life example; not one of my best deals, but it sounded good at the time.
Purchased 11/03 for $65,600.
Sold 10/04 for $91,400.
Improvements made New electric range, plumbing and heating repairs totaling about $1,000.
Net profit $6,800.
What went wrong??
This took way to long to sell. It was in an area where houses take about 250 days on average to sell. I put it in the multilist and as a Realtor only paid 3% to the selling Realtor otherwise my profit would have been only around $4k!! My payment of $607/mo with taxes and insurance ate up much of my profit. With seller assist, utilities, upkeep... I put 10% down plus closing costs so my return on investment was still very good but not what I originally expected.
Find out the average time it takes to sell a house like yours and the average price it could bring so you know what you are getting into.
Very good advice rewardrisk
The longer it takes to sell or move a piece of property in a given area, the less you want to put into it. Otherwise, time eats away at your profit.
Thats about what I figured. The good thing is the houses in the area sell fast. They dont last much more than 30 days. So as long as we can flip fast I guess its worth it. I might try to do fsbo for a few weeks but this scares me for my first flip. I guess if I try fsbo I just need a good lawyer. Any idea what that will run me?? Also I just saw a commercial for a company called by owner. They help you sell your house yourself. Anyone know what they charge and if they are a reputable co??