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Author Topic: 1st Buy - To Flip - Details on expenses until Sale.  (Read 3083 times)

Offline akashra

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1st Buy - To Flip - Details on expenses until Sale.
« on: June 20, 2007, 02:39:38 pm »
1st Buy - To Flip - Details on expenses until Sale.

I was intending to find a good property deal at 0 down or 5% down, and look
for financing through various banks/lenders/friends, etc..  and then resell that same
property for 10-25% profit as soon as possible.

In the meanwhile, I was wondering what type of capital is needed/recommended for morgtage
if say it takes 3 - 4 months to sale the property, or I suppose this can also be financed, or borrowed
in the same way the down payment can be? Say on a 300k house ..
Is there a way to delay/defer this at all?

Thanks,
Richard
« Last Edit: June 20, 2007, 02:50:57 pm by Rich_in_CT »

Offline mcwagner

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Re: 1st Buy - To Flip - Details on expenses until Sale.
« Reply #1 on: June 21, 2007, 10:14:22 am »
no.  Even if you find 100% financing, you'll need cash for closing costs on purchase, etc.

Don't forget repairs/make ready costs.

And it'll take 6 months.

And during this time the water heater will go out.

And you'll have to replace the fence and the GFCI that the inspector finds.

And the buyer will want a warranty.

And you get the point.  I'm not trying to discourage you, just know what you're getting into.

It's not as easy as the infomercials say, and it's never free.



Mark Wagner, CPA, LLC
Certified Public Accountant
http://www.facebook.com/MarkCWagnerCPA

Offline akashra

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Re: 1st Buy - To Flip - Details on expenses until Sale.
« Reply #2 on: June 21, 2007, 10:28:17 am »
no.  Even if you find 100% financing, you'll need cash for closing costs on purchase, etc.

Don't forget repairs/make ready costs.

And it'll take 6 months.

And during this time the water heater will go out.

And you'll have to replace the fence and the GFCI that the inspector finds.

And the buyer will want a warranty.

And you get the point.  I'm not trying to discourage you, just know what you're getting into.

It's not as easy as the infomercials say, and it's never free.


Nods, I get the point, and appreciate it.  Think I'm gonna go the route of saving 401k for a couple of years, get a 50% loan to put a small 5-10% down if necessary or use for other expenses if 100% financed, and continue saving a little extra capital on the side for such expenses... and begin reselling a few properties in about 2 years..

Offline mcwagner

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Re: 1st Buy - To Flip - Details on expenses until Sale.
« Reply #3 on: June 21, 2007, 07:59:06 pm »
consider wholesaling.  makes cash with low risk while you learn RE.  you don't have to deal with financing. 
Mark Wagner, CPA, LLC
Certified Public Accountant
http://www.facebook.com/MarkCWagnerCPA

Offline Dave T

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Re: 1st Buy - To Flip - Details on expenses until Sale.
« Reply #4 on: June 21, 2007, 09:21:39 pm »

Think I'm gonna go the route of saving 401k for a couple of years, get a 50% loan to put a small 5-10% down if necessary or use for other expenses if 100% financed, and continue saving a little extra capital on the side for such expenses... and begin reselling a few properties in about 2 years..

akashra,

Would you explain what you are talking about here?  Are you saying that you will borrow from your 401k to help finance your purchase?

How does a 50% loan only require a 10% down?

I'm confused.  Please explain what you mean.

Offline campbellgroup

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Re: 1st Buy - To Flip - Details on expenses until Sale.
« Reply #5 on: June 22, 2007, 12:21:07 am »
I find that no matter how NO MONEY DOWN the deal is tehre is always cash needed for something somewhere. I have yet to find a bank that will finance a flip deal, besides the hard money lenders. If anyone knows of one please share. Traditionally closing costs run about 8% of the sales price not including down payment. That would be tax,insurance,points,legal fees,TITLE INSURANCE etc...............
MIAMI FLORIDA DUPLEX 6/3 + 1/1 House SOLD 4/07 $76,000 Estimated ARV $250,000
CHECK OUT WHATS GOING ON AT WWW.MYFLORIDAREOS.COM, IF YOU WANT TO GET IN ON THE HOTTEST DEALS IN THE COUNTRY NO MATTER WHAT STATE YOU LIVE IN CALL ME 1-888-263-2378

Offline tominmichigan

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Re: 1st Buy - To Flip - Details on expenses until Sale.
« Reply #6 on: June 22, 2007, 10:44:26 am »
Dave,
What I think he means is that you can only borrow 50% of your vested balance of your 401k loan (there are conditions that allow more, but for an investment, you can only borrow 50%).
I see my employees use their 401k account as ATM machines and it is never good. 
I can't say that using 401k money to finance an investment is always a bad idea (maybe the investment choices available to you are dogs), but it ALMOST always is...

 




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