Thinking of Flipping a House that you buy through a short sale or foreclosure?
For Example:
1. You make money when you buy, not when you sell. So make sure you buy right.
2. Before you get in to the deal, know how you are going to get out.
3. Your target selling price should be below current market price for SOLD properties.
Here are the actual numbers for a deal I am doing now:
Selling Price $240,000
Costs
Purchase Price $175,000
Buying Costs $1500 (We have to do a double close)
Carrying Costs $3000 ( Anticipate 90 day hold -$500 for HOA, $500 for Taxes)
Improvements $6000 ( Carpet Tile, Some paint etc)
Selling Commission $7200 ( 3% to selling broker on$240,000)
Selling Closing Costs $2400
Total Cost of acquisition is $195,100
Margin for three month hold is $44,900
In this acquisition we have analyzed the market and are comfortable with the amount of velocity in the local towers, (this is a high rise). This return is effectively over 7% per month. If we are still holding this home after 90 days, we will start to drop the price in order to effect a sale. Our Goal is to turn our money three times a year. Note that the effective annual return on this investment is 92%.