Typically you pay an agent 5% to sell... on 180K that's 9K. Plus your closing costs... You might be looking at about 10 to 15K profit for yourself.
Beware though, I don't know where you are located (detroit?) but the market here in chicagoland has just hit the shitter. I'm currently trying to sell my house and it sucks ass.
Beware though, I don't know where you are located (detroit?) but the market here in chicagoland has just hit the shitter. I'm currently trying to sell my house and it sucks ass.
Iceman said:
Just remember this Iceman. The market value is what someone is willing to pay. If that house really is that far below market and has been up for more than 2 weeks, be careful. It should sell in a matter of days.
Analyze the downside too. You pay $145, plus closing costs. Then you put $10k in it. So now you're close to $160k in it. You can only sell for $170k, less agent fees and the interest you have to pay on the loan while you're fixing it up and waiting for it to sell.
You're idea is right, just understand all the factors.
Here's a good link for you Iceman, tells a scenario much like what you describe: http://www.creonline.com/wwwboard/messages/59585.html
I believe you are taxed at your regular Income Tax Rate and not subject to a Capital Gains tax(but the income tax rate is generally higher).
I believe you are taxed at your regular Income Tax Rate and not subject to a Capital Gains tax(but the income tax rate is generally higher).
For this home you describe, the advice Juice gave is the way to go.
If you sell in less than 12 months you pay taxes based on your income tax bracket, which is going to be much higher than the 15% capital gains tax.
Another issue: are you SURE that it will "only" be $10-15K to "fix it up"? I've under-estimated a few times and have gone over budget (I've flipped 3 times).
Another issue: as mentioned, depending where you live, the days of flipping are coming to a halt. Interest rates a higher (than the last few years), homes are way, way over-priced in most markets. In fact, in some markets (Vegas, NY, San Diego, Pheonix) it is predicted home prices will drop 2-5% or more!
Also, if they are asking $140 for this house....offer $125k and see if they bite. In today's market (a buyer's market) DO NOT offer what they are asking! Leave your number w/ the realtor and tell him/her that if the seller is serious about selling have them make a reasonable counter-offer.
But, at $140K - if you pay cash for the renovations and put down 5-10% your mortgage payment should be less than (or right at) $1000. If it's a 3br/2ba home you should be able to get that if the neighborhood is as you described......
I live in Jacksonville, FL and our market is predicted (by Forbes Magazine & MONEY magazine.....and several other real estate experts) to be the strongest in the state for the next year to two years. Real estate in Jax went up, just like everywhere else in the country, but not as much as Miami, Naples, Sarasota and some other spots in Florida. Forbes predicts about a 9% gain this year.
If you sell in less than 12 months you pay taxes based on your income tax bracket, which is going to be much higher than the 15% capital gains tax.
Another issue: are you SURE that it will "only" be $10-15K to "fix it up"? I've under-estimated a few times and have gone over budget (I've flipped 3 times).
Another issue: as mentioned, depending where you live, the days of flipping are coming to a halt. Interest rates a higher (than the last few years), homes are way, way over-priced in most markets. In fact, in some markets (Vegas, NY, San Diego, Pheonix) it is predicted home prices will drop 2-5% or more!
Also, if they are asking $140 for this house....offer $125k and see if they bite. In today's market (a buyer's market) DO NOT offer what they are asking! Leave your number w/ the realtor and tell him/her that if the seller is serious about selling have them make a reasonable counter-offer.
But, at $140K - if you pay cash for the renovations and put down 5-10% your mortgage payment should be less than (or right at) $1000. If it's a 3br/2ba home you should be able to get that if the neighborhood is as you described......
I live in Jacksonville, FL and our market is predicted (by Forbes Magazine & MONEY magazine.....and several other real estate experts) to be the strongest in the state for the next year to two years. Real estate in Jax went up, just like everywhere else in the country, but not as much as Miami, Naples, Sarasota and some other spots in Florida. Forbes predicts about a 9% gain this year.
