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A couple years ago, my spouse and I were in the market to buy a house. Instead of buying a house to live in, we decided to experiment with flipping a house. So, we started scouring the foreclosed home market for a house we could work on ourselves. We finally found a house that we thought we could manage.
So, we paid $87K for it. We spent a total of about $15k in material cost, new AC, water heater, etc.. We also spent lots and lots and lots of sweat equity. Like a whole lot of it.
We just had an agent walk through the house. She has determined that we should put it on the market for $154,900. She also said she is very confident it will sell for no less than $150k.
Is this a good rate of return? Can we pat ourselves in the back about this or is this normal? Or is it bad return?
PS - We have no intention of ever flipping a house ever again. Our next house will be brand new. In fact, we are looking to have it built from the ground up. Way too much trouble flipping a house LOL.
Sounds like it won't be a good enough return on your investment if it's your last flip ever. There's plenty of free ROI calculators on the internet. You just plug and chug.
as noted, you basically answered your own question.
Is 150K NET - $102K / 102K a good return at 47% simple return over 2 years? Of course. 20%+ a year is a good return.
But you haven't put any value on your own time. If you each worked 2 hours a day, 7 days a week, for 50 weeks a year, you earned $17/hr. How does that compare to your day job?
What you paid and what you sell for are just straight numbers. What were your closing costs on the $87k? What will be your closing costs on the $150k? What utility bills did you pay while you made repairs?
Everything adds up. It's not just $150k minus $87k minus $15k.
You calculate your returns after you sell.. Don't count any money or do any "back patting" till your names are off the deed.
Step 2, call 2 more realtors & get their market Evals. Look through all the "comps" yourself - some agents love to to quick, easy sales - one way to do that is to list a $180k house at $160k.. Easy peasy & since they know what you paid, they can be pretty sure you'll walk away "happy" even though they might have left a big pile of your cash on the table.
You calculate your returns after you sell.. Don't count any money or do any "back patting" till your names are off the deed.
Step 2, call 2 more realtors & get their market Evals. Look through all the "comps" yourself - some agents love to to quick, easy sales - one way to do that is to list a $180k house at $160k.. Easy peasy & since they know what you paid, they can be pretty sure you'll walk away "happy" even though they might have left a big pile of your cash on the table.
What you paid and what you sell for are just straight numbers. What were your closing costs on the $87k? What will be your closing costs on the $150k? What utility bills did you pay while you made repairs?
Everything adds up. It's not just $150k minus $87k minus $15k.
Well, technically it is 150-87-15. The reason is for the last 2 years we have been living there. It's been our primary residence. I don't think it's fair to count what we've been paying to live there as part of this.
Have you been paying taxes and utilities on it? Exactly how long have you held it? Has anyone been residing in the house?
My spouse and I have been living there for the past 2 years, ever since we bought the house and sold our last. We skipped a couple of vacations to work on the house.
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