It actually costs money you none…
But that’s only if you know How to turn a house over without money I’m using “OPM” … but it’s the subject of a completely different post.
That said, flipping a house costs money and money – It’s not your money..
This was a question from a new real estate investor I met during a recent meetup. This is just getting started in the local market. It’s a lot of fun talking to new real estate investors to see exactly what they’re thinking, what’s hindering them, and the problems they’re having with their first investment.
Real Estate Investment Association Meetings and meetups are generally a great way to not only build a network and grow a home-turning team.But for me, it gives me some fresh ideas about what to discuss here. Bigger Pockets In the same way!
Let’s get back to the question …
How much does it actually cost to turn the house over?
The answer here depends greatly on the price range of the project and the property in your area.
In my case, we usually buy a home in the range of 6 digits or less and sell it for $ 200,000- $ 300,000. Your market may be completely different.
Also, depending on your rehab costs, costs can vary from thousands of dollars to hundreds of thousands of dollars!
The most important number of house flipping, regardless of prepaid costs Value after repairAlso known as ARV.
How Much Does It Cost to Turn Home: Nail ARV
To know how much it will cost to turn a house over, you first need to know what you can sell the property for when it’s all over. Once you know all this important number, the other costs associated with house flips really start to focus.
The Best way to determine ARV Through comparing other homes similar to you that sold nearby within the last 6 months. These types of properties are called “comps”.
As long as you don’t have access to the MLS system, a realtor who knows the market can help with this.
You can certainly try to get a comp through an online service, but this number is so important that it is best to get the help of an expert. They know much better inside and outside the market than you do.
I’ve been doing this for almost five years, and I still use realtors in dozens of real estate markets.
There are some important points to keep in mind when deciding on an ARV.
- Look at homes for sale, not homes for sale
- Whenever possible, find a home that has been sold within the last 6 months.
- If the realtor is running a recent non-sales cost, this could be a warning sign as it may indicate that there is a lack of demand for the type of home you are buying. there is.
- Your broker should do this, but make sure he or she looks at other properties that have similar lot sizes, kitchens, heating systems, number of bedrooms, number of bathrooms, kitchen updates, etc. please.
How Much Does It Cost to Turn Home: Financial Costs
You’re flipping this house upside down, even if you don’t have your own money, so there’s a funding cost associated with it every time you flip it over.
As a rough estimate of what your possible financial fare is, find out from your realtor the average number of days your local home stays in the market before their soul. This will give you an idea of how long it will take to sell your property. Your realtor will have a lot of opinions about why one person speaks in a shorter period of time and another person speaks in a longer period of time-listen to their advice.
Let’s take this one step further and suppose you get a loan from a $ 120,000 private lender with a 10% interest rate. And consider from the date of purchase to the actual closing date. Taking into account the four-month refurbishment period, time in the market will be closed in one month, and then one month, making it fairly easy to understand funding costs.
- 4 months + 1 month + 1 month = 6 months
- Annual interest rate: $ 120,000 x 10% = $ 12,000
- 6 months interest cost = $ 6000
How Much Does It Cost to Turn a Home Over: Refurbishment Costs
The biggest cost of turning a house over is usually refurbishment. Our business doesn’t do the quick “fixes and flips” that plagued the home flipping industry many years ago. Make an ethical home inside out using the highest quality work possible while maintaining a healthy margin.
If you are just in Home flippingIt is advisable to do exactly the same.
And the best part of this is that you don’t have to work on your own. Knowing how to use a circular saw does not mean that you will be a competent remodeling expert …
I haven’t picked up a hammer inside out for more than two years (With one small exception).
Therefore, if you are just starting to turn a house, it is often best to hire a contractor for professional help.
Having a contractor on your team gives you a very good idea of the cost of refurbishment before the project begins. When you start flipping a house on a regular basis, you’ll be able to see how much it will cost very quickly – but first, get a contractor.
Many home flippers use the price per square foot to estimate the cost of refurbishment. We’ve previously advocated doing this, but each project is so different that it’s best to consult with a contractor or multiple contractors and bid on the work.
How Much Does It Cost to Turn Home: Real Estate Agent Fees
Many home flippers and real estate investors feel they are most qualified to sell their property, but I discourage you from doing this.
Realtor fees are fairly high (usually 5-6%) and can cost over $ 15,000 for a $ 300,000 real estate, but if you have a good realtor, this is definitely worth it.They will be an integral part of Flipping team in your home..
They know the market, they are experts and they are always selling to show the property while you stop finding your next deal …Or do your daily work.
You might think you could sell the property faster and save $ 15,000, but think twice. Suck it up and hire a realtor to do the job for you. Be sure to take their commissions into account in your overall rate of return.
How Much Does It Cost to Turn Home: Shipping Costs
Preserving properties incurs overhead. You still have to pay for electricity, gas, and mowed lawn, the list goes on. Includes only a small portion of these freight costs:
- Utilities (including electricity, gas and water)
Of course, the longer you hold your property, the more you hire these costs when you decide on your home at a cost.
If you’ve made it this far, leave a comment below. Did you leave the cost of turning the house? What do you think? Please let me know by leaving a comment below!