Flipping in this market? Are you serious?

I can't believe the amount of talk I hear and read about concerning flipping homes as an investment strategy....

Listen people -

FLIPPING IS A BIG PART OF WHAT GOT US IN THE MESS WE ARE CURRENTLY IN.

Never mind the fact that inventory levels far exceed standards needed to make flipping a viable option.

THERE IS TO MUCH COMPETITION AT THIS TIME TO MAKE A FLIP A SMART REAL ESTATE DECISION

Be wary of offers to place your money in a "No Brainer" investment opportunity. And for g*d sakes....

FACTOR IN ALL OF YOUR PRESENT AND FUTURE COSTS BEFORE DOING ANYTHING IN REAL ESTATE!!!!

Closing costs on a standard Real Estate transaction are approximately 8.5% on seller side.


Take this example:

Broker finds you a "can't miss" deal... home is listed at $100,000 - it needs work, but I "promise" with only $20,000 in repairs I can sell it for $200,000.... "you'll make $80,000!!"

Now let's break it down...

the home that costs $100,000 actually costs closer to $110,000 after closing and pre-paids... did you forget taxes, pre-paid insurance, general closing costs, etc? I guess your broker did.

So now your $100K home cost you $110,000

Now it's time for repairs.... what's the chance your broker estimated the repairs correctly? Is he a contractor? Did he inspect the home inside and out? Are you aware of ALL repairs that need to be made? Probably not....so let's be easy on it and bump the $20,000 to.....$30,0000 - fair enough?

So now your $100,000 home is a $140,000 home....

But OK, it's fixed up now and looks GREAT - let's sell it and make some $!!!!

Average days on market for a home in today's market is 5 months - that's 5 mortgage payments - add it up. I'll be nice and call it $3000 - though we all know it will exceed that - but we're just spit balling here, so $3000.....

Current cost of your $100,000 home? $143,000

Wait a minute....the phone's ringing!!! It's your broker, he has an offer!!!

It's for $190,000 - not what we expected, but it's been 5 months and by the time this closes it will have been 6 months, and your stressed - you want your $ and decide to "just get out".

You take the offer - but wait, what's this? The buyer wants you to contribute 3% towards their closing costs? That's close to $6000!!! But it's the best (and only) offer you've seen. You take it..

Yea!!! Closing day is here!! Time to cash in!!!

We goin' Sizzlaaaa.....

So you're at the closing table - how much did you make on this great, can't miss deal?

Sales Commission is 6% - $11,400
Contribution to buyer is 3% - $5,700
Closing costs are 2% $3,800

That's $20,900 - JUST TO SELL!!!!

So what's your net on this "can't miss" deal that was going to net you $80,000??


$26,100..............

DO YOUR DUE DILIGENCE PEOPLE!!!
IF YOU DON'T KNOW HOW, SIMPLY FIND THE RIGHT PEOPLE TO WORK WITH