Because hard money loans are so expensive, you'll want to pay them off as soon as possible. The interest rate is usually very high, 7-15%, with an additional fee that you pay upfront called "points," which ranges from 3-5% or more of the loan amount. But if you don't have $400,000 cash on hand, then you can get what's called a hard money loan. If you bought the property on the courthouse steps at a foreclosure auction, you have to pay cash, which means that your monthly holding costs will be minimal. If you got a loan, then you'll have a monthly payment to factor in, as well as the initial loan cost. Monthly holding costs can vary greatly depending on where you acquired the money to purchase the property. Even if you accept an offer the first day you put the house on the market, it will still take about 30-45 days for the buyers loan to be finalized and the sale to be completed.
Keep in mind that after the remodel has been completed, you still need to sell the house. Holding costs are what you pay each month while you own the property. Even with this team in place to help you, you'll still find costly surprises along the way. Having a great inspector and a great contractor on hand to help estimate costs is key to your house flipping success. The estimated cost of repairs is $50,000. It seems like you can easily make $125,000, but these numbers don't tell the whole story. You estimate that after you put $50,000 worth of remodeling in, it will be worth $575,000.
Let's say that there's a little old house near Green Lake that's priced at $400,000. Initial cost of property (again, here is where you make your money) Here's the equation that house flippers use to know if a property is a good deal or not:Įstimated after repaired home value (ARV) Making a profit on a flip is much harder than it used to be. Property prices were increasing so fast that you could buy a place, hold on to it for a few months, and even if you didn't do a thing the house would be worth more than when you bought it. House Flipping 101 - Flipping a House in Seattleīetween 20, when the Seattle real estate market was crazy and before the market crashed, anyone could flip a house and make a profit. Remember that kitchen and bathroom remodels bring back the highest rate of return on your investment, and improving on curb appeal will make a great first impression. For most flippers that means a house that is structurally sound and just needs cosmetic updates. There is so much to know and learn when buying and selling a house the "normal way," adding in the stress of flipping one is overwhelming for most people.įinding the right house to flip is essential. I don't recommend you flip a house if you've never bought or sold real estate before.
The second most popular saying in real estate, right behind "location, location, location," is, "You make your money when you buy, not when you sell." This saying doesn't get as much hype as location, but it's just as important to keep in mind in all real estate transactions. In this guide to flipping houses in Seattle, I'll pass on the advice that I've learned over the years as a real estate agent and investor, the "House Flipping 101" rundown, I'll point out spots where many flips go bad and how you can avoid making these costly mistakes, and then I'll tell you what I'd do if I were in your shoes. Today, real estate agent Christian Nossum walks us through the process of flipping a home and whether or not it's a good idea to do in the first place.Ĭan you still flip houses in Seattle and make money? Sure, but should you? Well, that depends on your level of risk tolerance, experience, knowledge, time, and cash.
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Curbed University delivers insider tips and non-boring advice on how to buy, sell, or rent a house or apartment.