This was a relatively straight forward flip. It was quick and easy. Inexpensive, and there were almost no surprises.
We purchased the property from a wholesaler for $175,000. I used hard money at an interest rate of 12% per year. The loan had a term for six months, and I paid 2.5 points on the front end- the purchase. My lender required me to put down $8,750, and we planned for the initial rehab to be $10,000 with a $1,500 buffer. We ended up using that buffer to upgrade some of the light fixtures and mirrors in the kitchen, and the bathroom just to add some upgrades. So the total rehab budget was $11,500.
We purchased our Builders Risk Policy at around $600. And our total interest for the time that we owned the property was $4,988. That was 1% of the loan every month, since the term was 12% annually. Since the total loan was $166,200, the monthly payment was $1,662.
At closing, I paid the down payment of $8,750 plus $11,913 in closing costs and fees.
We flipped the house quickly. It took about 10 days, and we got it right back up on the market. It appraised for $244,000, which is a little higher than we thought it would appraise, but we chose to take the price a little bit lower in order to get it to move quicker. Houses in that price range and area were sitting on the market for an average of 44 days, and that would have been $2,493 in interest, so we chose to lower the price.
We got it under contract for $236,000. $11,800 was paid to the real estate agents for commissions, and the buyer asked us to pay $8,500 in closing costs. They also asked us for a home warranty, which cost about $600.
So our gross profit on this was $215,100. And I had to pay back the loan, which as I said before was $166,200, the rehab was $11,500, and I put a total of $20,633 into it at closing, plus paid $4,986 in holding costs. That left us with a net profit of $11,731. And after taking out 25% for our favorite Uncle Sam (taxes), we were left with $8,798. Not a bad payday, especially for a quick and easy flip that wasn’t on my books for long.