Flipping a House, How Do You Determine How Much to Charge?

Flipping houses can be lucrative if done correctly. The process begins with acquiring a house that, for whatever reason, can be bought at a relative discount and sold relatively quickly. The house may be a recent foreclosure in move-in condition, or it may be a fixer-upper in need of complete rehabilitation. Whatever the situation, determining a price that will produce a sale that yields a reasonable profit is essential to the entire transaction. Different investors have different profit requirements, so there is no one-size-fits-all markup. Researching market conditions and accurately estimating cost and setting a price that both you and your buyer can live with is solid advice for any aspiring rehabber or flipper.

 

1

Get material and labor estimates from contractors for any repairs or renovations you plan to make to the house. Calculate your own material cost estimates if you will be doing the work yourself.

2

Complete the repairs and renovations. Add your acquisition, carrying (interest on any rehab loans) and rehabilitation costs to determine your total investment in the property. Include commissions if you use a real estate agent to market your home.

3

Research the local market for homes similar to yours. Consider the square footage, amenities and location of homes that have sold recently. Hire a real estate appraiser if you want your home's exact value, or consult a real estate agent familiar with your neighborhood to get a ballpark figure.

4

Set a sales price comparable to recent sales.

 

Tip

• Setting a price above what you are willing to accept will give you room to lower your price to close a deal.
• Investors are typically a tougher sell than buyers looking for a house to live in; know your buyer and negotiate accordingly.

 

Wholesaling Real Estate Basics

Wholesaling real estate provides an opportunity for someone to build income with little capital or credit. All it requires is ambition and some specialized knowledge. The more ambition you have, the more money you will make. Wholesaling does not require a real estate license. A license is not required to buy or sell any property that you have an equitable interest in. That interest can be a contractual interest (you have the property under contract) or you actually own or have title to the property.

What is Wholesaling?

A wholesaler in a nut shell puts property (normally distressed property) under contract and assigns or resells the property to another investor. The investors a wholesaler sells to either use cash, lines of credit, or hard money loans. This allows quick closings on properties that sometimes need extensive repairs.
A wholesaler lives off of the idea that price overcomes all objections. If you can sell a property for a low enough price it doesn’t matter what’s wrong with it, somebody will buy it. A wholesaler focuses on developing two things. Finding deals and their network of investors to sell to.

Getting Started Wholesaling Real Estate

Getting started, a wholesaler should normally not ever buy a property. You put properties under contract with a contingency and focus on quickly selling the property for more money to other investors. If you end up not being able to sell the property before you are expected to close then you utilize your contingency and walk from the contract.
A wholesaler is a middle man, and a good wholesaler becomes a very well payed middleman that other investors love. The thing is that if you have a good enough deal under contract, there are other more established investors out there that will be glad to pay cash for it in a matter of days. If you have a house that will sell fixed up for $100,000, it needs $10,000 in remodeling, and you have a contract on it for $55,000, then with a developed investor network you could have an investor buyer for it for $60,000 in a matter of days. You sell it or assign the contract for 60K, you bought it for 55K so you just made $5,000 in a matter of days.