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.
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
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
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
and real estate taxes for the period of the ownership
Cost of professional services and advice you
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.
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.