How do you buy a house, then flip it and sell for profit?
I do not know the concept of it.
let’s use this example:
If I buy a house for 150000 and get a 30 year fixed mortgage. let’s say that I would pay around $900 per month. okay now it’s been 2 months and i flipped it and want to sell it. How do i do it if i havent finished paying it off?
Let’s say you sell the house for 200k, then that money pays off your mortgage, and you make a profit of 50k minus any money you’ve already paid towards the mortgage or to renovate.
It is rare that people can consistently buy houses and flip those houses at a profit.
There are unusual circumstances where a depressed market will turn around very quickly and be grateful for at a rate of 10 to 20% per month for a few months.
Under those circumstances it is possible to buy a house and have the houise increase in value by 10 to 20% by the time that you accurate escrow.
In those rare cases you can sell the property for 10to 20% more than you paid for the property.
But given the high costs to sell Real Estate I do not recommend Real Estate for those who want to flip houses.
Real Estate only makes sense if you plot to buy Real Estate and hold it for a period of time.
If you want something to trade I recommend that you look at the market for Stock Options or Currency Options.
There is a fantastic deal of activity in those markets. Just as mcuh leverage. You can make money no topic which way the market is vacant.
The transaction costs are a much smaller percentage of the Transaction.
In your example, you would have to sell the house for the $150,000 plus two months appeal plus costs (real estate agent fee, fix up costs, etc.).
Assuming it cost you lets say $25,000 in fix up costs, say, $4,500 in closing costs to buy the house, and two months appeal – say another $1,600, you need to start selling at $150,000 (buy cost), plus $25,000 plus $4,500 plus $1,600 to initially break even – that is $181,500. But it will cost you another $18,000 in fees to sell the house (real estate and additional closing costs), so you will need to sell the house for $200,000 to break even after two months.
Say you sell the house for $210,000, you would pay off the remaining mortgage of say $149,800, recoup your closing costs for buying and selling, recoup your fix up costs and pocket $10,000 in profit.
If in this example you sell for less than $200,000, you lose money.
You place of protection’t flipped it until it is sold.
You buy for $150,000 with a loan with no pre-payment penalty and no points. You invest $10,000 in repairs, sell for $200,000. When funds are transferred from your buyer, the self or company handling the transaction pays off your original loan.
It is a rare market where a self can successfully flip homes. Long days on market, a huge inventory of homes to choose from and limited buyers have place the vast majority of people out of the flipping business.