Costs You Should Account For When Flipping A Home
You want to make sure you look at all the costs when doing a flip. Many people will miss certain costs, and this can eat away what you thought your profit was going to be.
I like to break down the costs into three stages;
Costs of procuring the property
Your cost of procuring the property could include the price you pay, lawyers fee, appraisal fees, home inspection, other inspections like well, septic, electrical, title insurance, and land transfer. A quick rule of thumb is 3% to 5% of the purchase price. So if I paid $400,000 closing cost would be $12,000 to $20,000.
Cost of renovating & carrying the property
When calculating the renovation cost, you want to include all material, equipment rental, delivery charges, trade costs, permits and an hourly rate for your labour. The carrying cost would include, financing costs, utilities, property taxes, and home insurance. The length of time that would be carrying your home is dependent on two things. First how long does it take you to do the renovations? The second factor is the length of time it will take to sell your home and the closing date. If you put your home on the market late fall, it may take longer to sell then in the spring market.
The costs of selling the home
The last set costs are of selling your home could include, real estate (approximately – 4% to 5% of the selling price), lawyers (about $1,000) and staging costs ($2,000-$4,000 per month). Some realtors like our team will include staging in the realtor fees.
It is important to know all the cost so you can estimate your potential profit correctly.