All Forum Posts by: Devin P.

Don't forget you need CASH to pay off debt and HELOC interest assuming you did interest only payments since your using it short term. My issue on my first flip was I used HELOC to pay contractors, but used all my cash before utilizing my credit cards. It made it difficult to keep up with holding costs on that stupid mistake I made.

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I just flipped our very first house. I was willing to do some of the work ourselves. It had mold, termite damage, water leaks, typical stuff. We contracted out to do the roof and new windows, all new HVAC, and updated the electrical.

Demo, Framing, plumbing, drywall, tile, finish work, re-finishing hardwood floors, complete bath gut, adding additional full bath, kitchen gut, landscaping, staging all done by yours truly.

I was expecting to take care of the majority of the tasks due to our budget. Purchase was 170. Repairs 45k. ARV 275.

We have 2 younger daughters. I watch a lot of youtube videos of hands-off investors and listen to all the podcasts about investors not knowing how to change a lightbulb, listen to podcasts about 20-30k total rehab for flipping a house hands off and just simply don't know how that's possible with some of the quotes I received for the work. If I was hands off, that house would have easily been 80k in reno cost. What boggles me even more are the people that say they got them off the MLS. It took me a year to have a deal accepted with all the bid wars we got into.

I can say that I have taken what was meant from this opportunity, which was a learning experience. I went into this happy to even loose money as long as I gained experience. 4 months straight of that on my days off work though definitely took a toll. Its HARD work. I think people get into this thinking they can successfully be hands off and still make money on their first few deals. I have a fair knowledge now on the actual costs of things and have gained a small list of contractors that are worthy for future business, and others that I blocked their number.

Overall, I'm here to make money, not sit on my ***. Getting dirty soon again.

I bought my first property without an inspection contingency. Competitive markets offer little to no chance of getting a flip without taking a risk. I would hire a pro and of course do a walk-through.

If and when your offer is accepted you can do another walk-through with a contractor to point out anything you may have missed. If anything serious shows up, don't submit your EMD...

At least that is how I have done it and my realtor gave me that same advice.

My property has mold, termite damage, water damage, a drawing of a possessed clown on the basement wall...

Another reason I was bidding against cash offers. It took us about a year and 50+ offers to finally get an accepted offer worthy of making a profit. Closing on a Fannie Mae renovation loan is a pain in the ***. I threatened to walk away from the contract and they didn't want it to go back onto the market, so they lowered the price by 10,000. Again, we dealt with a multiple offer situation from day one in my area with cash offers. Its tough out there, BP makes it seem easy in some of their podcasts. Getting your foot in the door is tough. I think your realtor knows that and is trying to give you some leverage into getting your hands on a good property.

The county does not do appraisals as far as I know. They are independent companies and you must pay out of pocket for that expense...I would not get the house re-appraised, let the buyer do that.

Has anyone had any experience with this company? Very hard to find reviews on it. My wife has been using them in hopes of settling student loan debt she has. Interested if anyone has information or experiences with this company.

I was using a 4% general rule and thought I would be okay with that and was surprised to see the estimated costs be so high. I'm just not sure if for investment properties it is normal to have closing costs near 7-8% range of total purchase price. It seems excessive and not sure if I should switch Brokers in the future.

When you say closing costs, that excludes transfer taxes, prepaids...stuff like that?

2.5% of 215,000 is 5375. Using that rule, I would be way off in estimating these costs...

I assumed when people say closing costs, they mean ALL costs. 2% is transfer tax alone by itself that is coming out of my pocket and must be accounted for as a "loss" when calculating profit.

I have a property under contract using a Fannie Mae Renovation Loan. When doing a soft assessment of the property I originally used 4% of the total cost of the property for closing costs. 2% of that being "transfer taxes". I found out that I am saving money purchasing a Fannie Mae home, since they are exempt from transfer taxes. The total cost of the loan is 180,000 principal with 35k added to its "required" renovation budget. I was planning on using my own funds for renovation, but apparently the type of loan I have requires a security of the renovation work being included in the loan.

So that puts my total borrowed money at 215,000. 4% of 215,000 is 8,600.

I received a rough draft of expected closing costs and total money due at closing which forced me to re-run different number scenario and loose profit.

Here are the numbers.

Purchase 180,000

Renovation Allowance 34,500

Estimated Prepaid 3280.51

Estimated Closing Costs 9844.00

Total Loan Amount 171,600 (after 20% down is calculated)

Origination 4,719

Appraisal 535

Appraisal Update/ Inspection 800

Credit Report 85

Permit Fees 650

Title - Title Update 400

Total 2470

Survey 350

Title - Closing Protection Letter 125

Courier 125

Incoming Wire 30

Lenders Title Insurance 640

Settlement Fee 445

Title Search 200

Total 1815

Taxes and Gov Fees 525

PrePaids

Home Owners Insurance 12 mo 720

Interest 460

12 Mo Prop Taxes 1884

Total 3064

Escrow 217

Title- Owners Title Insurance (opt) 315

TOTAL CLOSING 12,796

From what I have read, that seems high, especially since I am suppose to be saving 2% on transfer taxes. I talked to them about subtracting the pre-paids and not putting the property into escrow since I will be flipping the property. Add another 2% to that if I did indeed have to pay transfer taxes, and that's another 3,600 putting closing at 16,396. I understand the type of loan I have versus conventional That is over 7% on closing costs for the property if I did have to pay transfer tax. I budgeted for 8k originally and thought I would be saving money by avoiding transfer tax, but it looks like that's not the case. Can anyone offer any insight or tell me this is "normal". Would help me properly calculate closing costs for future investments.  

Got ya. That settles that. I'll steer clear. Thank you!