The Major Costs of Flipping a House

by Claire Rainville 05/22/2023

For many, flipping homes is lucrative. However, there are many costs associated with flipping a property, and it’s important to budget carefully for every detail. Here are the major costs to consider when determining how much funding you’ll need for a flip:

Down Payments

Just like buying a move-in ready house, buying a house you intend to flip will require a down payment. Depending on the terms of your financing and the total price of the home, the down payment will be your largest expense to plan for. Traditional mortgages call for about a 3% minimum for a down payment, but this amount can be much higher with other funding sources.

Financing Costs

Most financing options will include interest. Even though they might be very low percentage rates, they are a regular cost to factor into your budget. While regular mortgages may have low rates right now, the type of loans most commonly given to house flippers can have interest rates as high as 10%.

Homeowners Insurance

Even though you might only own the house for a short time, you’ll have to pay homeowner’s insurance. Most lenders require proof of a homeowner’s insurance policy as a qualification for approval, especially if the house is being used as collateral.

Taxes

Don’t forget about adding relevant taxes to your budget. The main ones to plan for are property and transfer taxes. No matter how long you own the property, you’ll be responsible for these taxes and should set aside adequate funding for the payments.

Renovations

The cost of renovations will probably be your second largest expense to budget for. Unfortunately, this can be the hardest part to estimate. To get the best viable idea of how much money you’ll need to set aside for renovations, consult a contractor, home inspector or both to create an estimate.

About the Author
Author

Claire Rainville

I have been conducting business in this local area for 20 years as a full-time real estate broker. My priority as a real estate broker is to ensure my client’s satisfaction through providing them top-class service specifically catered to their individual needs. As your agent, I will effectively communicate with other parties involved in your transaction to ensure the purchase or sale of your home/land/investment property goes smoothly. I use my high-touch philosophy and high-tech resources to attractively market my listings as a seller’s agent, and will proactively use my connections as an experienced real estate broker to find my clients’ their dream home. I am also available via phone, email or text messaging to accommodate my clients’ various schedules and/or preferred mode of communication.