When it comes to house flipping, it is incredibly important to map out all of the costs and to calculate any hidden fees that may be associated with the flip. Realizing that you don’t have enough money to cover all of the fees and costs of the project will only cause the flip to take more time and, when it comes to investing, time is money. Here are some commonly overlooked house-flipping fees.
- Contractors
When it comes to the repairs and renovations, you don’t want to take the cheap route. A good contractor will help through the renovation process and will help cut down on the costs. This is route is much more efficient than simply hiring repairmen to fix up plumbing, electricity, etc. Hiring a contractor will cost more upfront but will save you money in the long-run. Remember the 70% rule which requires that you not spend more than 70% of the after repair value (ARV) on the renovations.
- Inspections
Let’s say you find a great property for a great price and the owner tells you that the property has few or no flaws—are you just going to take their word for it? Of course not! You will need to bring in an objective third party to inspect the home and tell you the real value including the estimated costs of repairs. Hiring an inspector may not seem important at first but it can save you money and can help you determine exactly how much you should expect to put into repairs.
- Insurance
The cost of insurance varies depending on your location but a good insurance policy will help you if there are any accidents involved with the flipping process. Again, this is just another upfront cost that will help save you money down the line. It is also important to note that insurance policies can be more expensive for vacant homes.
