Well, we finally closed on Friday and now I can do the big reveal on our financial specifics. In case you missed the big reveal on the way everything looked, check it out. I'm super proud of our work. I shared our original projections back when we first bought the house. We were WAY OFF in a good way. As a re-cap: our projected profit was $13,099. That was a purposely conservative projection, which made us feel good about this investment. We figured that we would probably make more. We didn't anticipate how much more our profit would be! Here are the details: Purchase price:$ 155,000 Rehab costs$ 38,732 Holding costs:$ 5,017 Closing costs:$ 7,923 Realtor fees:$ 13,750 Sale price:$ 275,000 Profit:$ 54,578 Obviously, the biggest error in our projections was sale price. We had expected to sell for $235,000 and ended up selling it for $40,000 more than that. The market was on fire when we listed the property. John and I argued a bit about the listing price of the house. I was arguing for much lower (I'm embarrassed to say this, but I was saying $249,900 to get at those with a $250K max price). John, my realtor boyfriend/business partner, had done the comps and wanted to list ...
Our first flip begins
Well, yesterday was the big day. We closed on our first investment property together. The closing was relatively painless and only took about 45 minutes. We spent the rest of the day getting supplies, going to the house, and getting bids. Today John started demo. I took pictures and video and will post them soon. I read this article about how reality TV flipping shows don't give viewers the real details about the costs involved in flipping. They simply give the purchase price, rehab costs, and the sale price and use those numbers alone to calculate profit. These profits are artificially inflated because they do not take into account the substantial other costs that go into it including holding costs (utilities, insurance, interest, etc.), closing costs, and realtor fees (5-6% of the sale price). In our case, these three buckets add up to more than $20K. So, in an effort to be transparent, here are the financial details of our project: Purchase price:$155,000 Rehab budget$45,188 Holding costs:$4,238 Closing costs:$5,725 Realtor fees:$11,750 Sale price:$235,000 Profit:$13,099 The profit is a lot less than what we discussed our threshold should be, but after going through so many rejected offers we realized we would have to adjust our expectations. This is still a ...
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