fbpx
Home Repairs To Avoid for Resale – Top 5
February 25, 2020
selling a house during coronavirus
4 Mistakes to Avoid When Selling A Home – Coronavirus Update
March 23, 2020
Show all

How to Flip Your Own House

how to flip your own house

Learning How to Flip Your Own House

Learning how to flip your own house can be daunting. Most of us watch those HGTV shows that make it look so easy, but it seems much more difficult when you think about actually doing it yourself. Why is this? HGTV leaves out so many details that are crucial to someone who is about to go through the entire process in real life. That’s why we have written this article that dives into the numbers of flipping your own house.

Calculating Projected Profit

This is the main aspect that HGTV leaves out because it doesn’t make for great television. This is the same reason why it becomes intimidating when you’re trying to figure out how to flip your own house. Repairs are expensive and we need a concrete set of rules to justify that spending.

how to flip your own house spending
Running the Numbers

Let’s start with an example. You own a house that’s a bit outdated and you are hoping to update the house to a condition where you will have a higher net profit. See example pictures from one of our previous projects. You can speak with your real estate expert (Laura DeCora is a great option 😉) to determine the expected After Repair Value (ARV) and a contractor to get estimates for the repairs and updates you want to make. Read here to see some of the best things to update prior to sale to maximize your net profit and here to see things not to repair. Let’s pretend the following circumstances are true:

Estimated After Update House Value$300,000
Current Mortgage Owed$200,000
Estimated Cost of Updating$40,000

Don’t get too excited. This does not mean you are going to make $60,000. Let’s look at additional expenses that most people forget about.

Listing Fees (6% of Sale)$18,000
Seller Closing Costs (~ 3% of sale)$9,000

Breaking Things Down Further

This means your projected net profit from the sale after updating would be $33,000. Is that good? You should always compare this number with the projected net profit if you instead sold your house in its current condition. Imagine these are the projected numbers for selling the same house as-is.

Estimated As-Is Value$250,000
Current Mortgage Owed$200,000
Listing Fees (6% of Sale)$15,000
Seller Closing Costs (~ 3% of sale)$7,500

In this example, you would make a net profit of $27,500 if selling the house as-is. Comparing $27,500 to the $33,000 net profit for the update, we can start to determine whether the update is worth your time. Would you rather make $27,500 with no work, or $33,000 with work? This depends on your timeline, your personal goals, and your available cash. Only you know the answer!

Summary

Learning how to flip your own house is more than just having an eye for design. The major hurdle most people can’t overcome is figuring out the numbers. If you need help figuring out the numbers on your own flip or if you’re looking to maximize your sales price by using the most talented real estate agent, reach out to us! We are happy to help 🙂

DeCora Team
DeCora Team

Leave a Reply

Your email address will not be published. Required fields are marked *