John R. Wood Properties
Lenore Vitale, John R. Wood PropertiesPhone: (239) 370-7030
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Flipping a House: How Much Funding Do You Need?

by Lenore Vitale 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

Lenore Vitale

Lenore has been a Collier County resident for over 40 years. She fell in love with Naples and surrounding areas and decided to make the move from Cleveland in December 1981. Lenore has a Bachelor of Arts Degree from the University of South Florida where she met her husband of over 25 years. They have two children that attend University of Florida and Florida Gulf Coast University. She has worked as a Community Service Deputy with the Collier County Sheriff’s Office, a Guest Teacher with the Collier County Public Schools, and continues to serve on many committees with the Parent-Teacher Organizations in Naples. Lenore has a true passion for Naples and is excited to put that passion to work for her customers. Whether you need an expert guide in buying a home, or a dedicated leader to sell your property; her love of Naples will always give you piece of mind in your real estate venture.