Flip - Lingo
Okay, I'm new at this (clearly). We have decided to get our piece of the pie and have made our first offer on a piece of property in a hot area. The purchase price we are trying to get it for is 145K and we suspect 30K in rehab, + realtor fees to sell (14K) , holding costs(6K) for approx. 6 months, and a margin of error : ) of about 10K . Our realtor believes (he flips too) that we can sell the property for 230K low and 250K high depending on how well the jobs done. Now I am trying to read the board and learn the lingo and things to look out for and I get a little confused. I purchased a book today supposedly about flipping and it's indicated that when they use the term "flipping" they mean to buy, fix-up, and sell. Well, that's what we want to do, but we are not planning to occupy the home or do the work ourselves. We are set up to have the work done in 6-8 weeks and then put it back on the market. Isn't this flipping? Am I just not getting it? Now, my other question is and trust me trying to understand in theory the tax implications has been a challenge, What kind of capital gains taxes can we expect. Now from what I've read (another book purchase) we should expect 20% federal + state. Is there anything else I need to look at? Seems to me the idea is to buy low, sell high, and do it as quickly as possible. Point me in the right direction and I'll follow!
i am new to flipping to, but u are correct. Buy low, rehab or just sell high and that is a flip. But it's been my experience that some lenders do not like the word "flip". I am not sure y, except that they are not getting much interest for the time you actually own it. In fact, maybe none at all if u close correctly and at the right time.
Would the best kind of loan be an investment loan with 10-20% down and a point above normal? When I purchased my first home I used it after a rental just a few months after I had lived there. I didn't have to pay anything additional because I was planning on using it as my primary residence. However, if your just going to flip it wouldn't you get a normal investment loan- or do you have to get a special kind of loan?