Environmental Issue & Sick Building Syndrome Blog

The Real Cost of Flipping A house

August 14th, 2014 10:26 PM by Dan Howard

So You Think You will Become a Millionaire by Flipping Houses

                It's the middle of the night and there it is…the ad for the CD set, seminar or book that will guarantee your financial freedom. In your semi-comatose insomnia, you imagine your life on the luxury boat that you will be able to buy. For the cost of your time to read this article, I will give you a home flipper's secret that you probably never heard of before. Just hang in there and keep reading.


                I must admit that I did attend one of those seminars that would make me grant me that magic of Real Estate riches. It was interesting and exciting to hear the crowd oh and ah at all of the success stories as the seminar host took testimonial after testimonial. The sad news for me was that I did not take the next step. For a mere $ 6,000.00 entry fee, I could join the program and have my own coach and team of experts that would assure my success. I never should have asked myself "why is this guy running seminars every Thursday night when he can make all the money he could ever use by implementing his system." That one question spoiled the magic on the evening.


Understand the Real Cost of Flipping a House

                Back to: Who is making what money? A $200,000 flipped house sale is not profitable if it cost $ 200,000 to get to the settlement table.  You get what money is left at the end of the line. The tax man, bank, Realtor, insurance man, contractors, and others get their money before you do. The bottom line is that you need to look at all of your costs before you start this endeavor. The cost of getting to the final settlement includes:


  • Contract price to purchase the home

  • Closing costs to purchase the house

  • Cost of repairs

  • Cost of your time. Your time has value.

  • Costs of selling the home including another settlement

  • Utilities, fees  and real estate taxes for the period of the ownership

  • Cost of professional services and advice you will require 

  • The cost of your personal tax obligations   

  • The impact on your quality of life.

  • If waiting for the sale creates stress, that is a cost too.


                Here is the advice I told you probably never heard. If you are buying a home in a neighborhood where there have been several foreclosures, all of the other homes will have a depressed appraised value.  What that means to you is that the house you thought would sell for $200,000 may only sell for $175,000. The appraisal for the buyer of the home you spent your time and money improving is critical to your sales price.        

Posted in:General
Posted by Dan Howard on August 14th, 2014 10:26 PM



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