Is flipping expensive for cash home buyers?
Flipping is risky and tougher than it seems on TV, especially in Pittsburgh! More often than not, it usually ends up taking a bit longer and costing more than anticipated from entry to exit. Many home sellers we speak with consider flipping their own house as a possible option for selling.
Let’s break down what all goes into a fix and flip! (We’ll show you a detailed example with realistic figures at the end.)
Pittsburgh cash buyers typically see a return of 20-30% net profit, and a flip takes an average of 4-6 months from entry to exit. The less construction a property needs, the quicker you can sell it. This will shorten your timeline to minimize expenses and maximize profit! A home buyer in search of a flip won’t typically find the risk, time, capital, and effort worth it for anything less than a forecasted 20% net return.
There are 4 main components: Buying costs, holding costs, selling costs, and income tax
- Purchase Price
- Closing costs (usually 3% if paying only the buyer customary costs)
- Inspections: home, camera sewer, radon, pest, mold (if applicable)
- appraisal (if applicable)
- loan origination fees (if applicable)
- Finders fee (if applicable)
- Utilities (water, electric, gas, sewer, trash)
- Landscaping/lawn upkeep
- Construction (labor and materials)
- Interest payments (if applicable)
- Realtor fees (if applicable)
- Closing costs (usually 3%)
- Seller concessions/seller assist (if applicable)
- 25-35% of your net profit based on your ownership structure and tax strategy