Updated almost 8 years ago on . Most recent reply
22 YEARS OLD BUYING MY FIRST INVESTMENT PROPERTY
Hi everybody,
I am new here to the BP community so I wanted to introduce myself! My name is Andre and I am a 22 year old realtor licensed in New England. This will be my second full year being licensed and I am in the beginning stages of purchasing my first property ever, which happens to be an investment. This isn't my first attempt, I tried earlier this summer and the home ended up having title issues which prevented me from purchasing the home. Deed was defective and I would be locked in for over a year before it was resolved.
Fast forward to a week ago. I get wind of an estate, it is in a condominium complex. Desirable location, no serious work needed besides cosmetic upgrades and the sellers are listing with me as well. I wanted some input from the more experienced investors here. We have agreed to 136k purchase price. My resale projection is 175k(conservative) to 190k. Estimated repair costs are 6k, all cosmetic; the unit is in great condition. Other expenses including, listing co-broke, transfer taxes, and mortgage for 2 months will bring me to about $13,600 into the unit. A total of 149,600. I spoke with a good friend and investor client of mine and he suggested I increase my rehab budget to 8k(I sent him a video of the unit). So I will round my total up to 151,600. Resale estimate 180k and 20% gains tax I am estimating profit near 22k.
Am I missing something? Any expenses I did not account for? I'm nervous. This is my first purchase ever and I want to make sure it is right. Ironically enough I've helped multitudes of my investor clients buy and sell rehab properties but this is my first time doing it myself. I am very superstitious and feel if I speak about something before it happens it never goes through but I need advise here so any and all is highly appreciated and will keep you all updated. I sent the formal offer this morning after we agreed to a price and she is having her attorney review it. Fingers crossed!
Most Popular Reply
In terms of rehab, always estimate more and longer than you would expect. In the midst of these cosmetic improvements, you may stumble across other issues. 20% Capital gains tax, are you holding for a year? If not, look into ordinary income & subject to self employment tax. Any cost on Attorney fees? HOA? Insurance? Utilities? Trash? Have you taken a look at the HOA financials in terms of how they will look to prospective buyers or any indication of upcoming assessments?
Good luck with your offer & wishing you luck on your first flip!