Buying And Flippin 30k Equity, How Much Profit?
Hi, I am new to the investing part of the real estate but a found a potential deal. My uncle is selling a house that he bought preconstruction. So far the plan is to rent it, but he has offered it to the family for 250K while it is worth up to 280K. Is there enough profit to buy it and flip it again after cost of selling and gain a profit. As far as loan cost, I will be able to put money in my pocket from the loan (im a loan officer). Is the common listing in Nevada 5%. What is the taxes and insurance going to run me?
I plan on taking out a second to 100% to pay the first. until I sell it for 280K (3 months if the market is still good).
Thanks a 30K for the help
...get it instead of thanks a million i put 30K
can anyone help me with the numbers, or know where to get some answers?
if the common listing/selling fee is 5 percent to do it twice is 25000 at least ....I am missing something I guess, where is this a good deal? Cost of loans and closing is????
well I only sell it once, i pay no fee when buying.
so far these are the fees that i can come up with,
5% for selling = -12,500
Cash from loan (i get paid for doing it) +1,300
mortgage is -1660 a month interest only , which is lost to the bank.
then 1% for fees/taxes is what i am estimating=-2500
this gives me a 16300 profit, if i sell it the next day for 280K
subtract 1700 for every month it sits on the market.
Unless I’m missing something, the numbers just don’t work.
But I’m a little confused. How do plan to get paid for doing the loan? If you’re a loan office, you legally can’t write loans for yourself. And even if you could, you wouldn’t charge yourself points. Which leaves YSP. And if you’re working for someone that’s doing some sort of a split with you, I would be real careful. RESPA is cracking down hard lately.
You may be able to get rid of any junk fees, etc., but you will still have closing costs – both buying it and selling it.
And if you’re planning to flip, don’t forget prepayment penalties - which could add to your closing costs and/or your rates.
And you don’t just subtract $1,700 every month it sits on the market. What about taxes? Insurance? Utilities? Etc. You are responsible for those until the day it closes.
Granted, your taxes and insurance will be prorated and paid through escrow, but that just increases your out-of-pocket at closing. So, you still need to account for it either in your holding costs or your closing costs.
I figure your holding costs will more realistically be around $2000-$2300 per month.
Also, your $12,500 number is wrong. You’re basing your 5% on the price you’re buying it at – not what you’re selling it for. It would actually be $14,000 if you sold for $280K.
Here’s some rough numbers I came up with:
$280K FMV (maybe)
$250k purchase
________________
$ 30K maximum gross equity
$ 4K closing cost (buy and sell)
$ 14K 5% realtor fees to sell
$ 7K PITI - 3 months holding
________________
$ 25K minimum costs
$ 5k maximum profit potential
So, just doing some rough numbers, you’re maybe looking at $5K profit. This is providing you don’t have more than $4K for total closing costs for both buying and selling. Providing you can sell for $280K and don’t have to reduce it. Providing you can buy, sell, and close within 3 months. Etc., etc.
Maybe others on this site will have some ideas for you. But if you have to finance it and sell through a realtor, your profit is pretty much gone.
My 2¢
Well cutting out the re agent is a major possibility. I will not have any closing cost on my loan or prepays, that is for certaint. Thanks for that slip on the selling price, just going to fast with the numbers online.
Much appreciated
thank you, i do realize this is thin profit, that is why i am notdiving in, but first investor deal this sounds like a good start to mess up even.
Taxes and capitol gains has not even been looked at, thank you. Does anyone have software that helps you work the deal with tax info. Sounds like a good exel spread sheet might help me too.
It would not be arms length. the owner of the mortgage company legally does the loan and the lender (some dont allow this) allows real estate and employed loan officer to get a loan none arms length.
Thanks again, but it sounds like their is 25 more varibles i dont know about. I wil talk to a realtor from Nevada soon to learn more about the market too.