Basic House Flipping Costs and Wholesaling Costs

When starting a wholesaling business there are a lot of wholesaling and house flipping costs. Not only will you be in charge of finding leads, finding the Fix Flip Loans buyers, bringing them together, working with the title company and even dealing with contracts, you’ll also be covering costs until and when that house sells.

No one wants to muck-up the process with worry about unpaid bills and trying to finance these wholesaling efforts. Yet, it comes with the territory. Luckily, most of these costs come at closing and can be paid for by the buyer. When they aren’t though, you can be prepared for them by knowing about those costs ahead of time.

When involved in wholesaling there are two levels of cost. The first is the cost associated with house flipping. The second is the cost associated with wholesaling. These are two separate, but closely related enterprises.

Basic House Flipping Costs
House flippers earn money via purchasing the flip first, fixing it up and placing it with a real estate agent to try and sell the property for top dollar. As an investor your house flipping costs will include plenty of costs that are normally associated with purchasing a home:

Realtor’s Fees

When the house actually sells on the market, you’ll probably have a realtor’s commission to pay. However, this usually comes out of the profits from the sale of the real estate property. This is usually about 6% of the selling price.

Carrying Costs

These are the basic costs of owning a home. You won’t have to worry about them when starting a wholesaling business, but if you intend to be a house flipper this is what you’ll be responsible for:

Property Taxes
Regular Maintenance
Electric, Gas, Etc.
Mortgage

The longer you hold that property in your name, the more house flipping costs you’ll have. The more cost you have, the more you bring in on a sell to profit.

Loan Costs

House flippers can also buy the house they intend to flip. This can mean a mortgage in your name or at least cash out of pocket that you’ll have to make back on the sale of the property.

Insurance

Since the property will be in your name house flipping basics says you’ve got to cover it! It may be difficult to get homeowner’s insurance for a wholesale property. Your best bet may be to pick up Builder’s Risk Insurance. This is insurance that’s intended for properties being built or in the process of being remodeled.

Repair Costs

House Flippers will want to repair any damage to the cheap property they’ve just purchased. Naturally, you’ll be responsible for remodeling costs and repair costs to the contractors you hire.

The Costs Involved in Wholesaling
As soon as the average wholesaler gets a client to sign the agreement to sell their house they should be out the door or on the phone looking for potential buyers. These buyers are usually other investors who like to buy houses cheaply and fix them up with their own house flipping costs. Buyers may even be hard money lenders who are looking to expand their business into new areas.

The wholesaling costs are really minimal. You’ll be focused on selling that house before the agreement to sell the house reaches its closing date.

Wholesalers don’t spend money to fix up the house, on insurance or even placing the property with a realtor if you can help it. Yet, you’ll also usually be responsible for closing costs and even a referral bonus if someone referred the property lead to you.

Appraisal Costs

Depending on where you are and how you close the deal you may need to hire an appraiser to look over the house and give you an estimate of its market value.

Home inspection

Wholesaling property buyers aren’t usually nervous about buying a home that needs some work, but they may want to know what kind of work needs to be done before purchase. So, you’ll have to get a property inspector out there to evaluate the damage so you can present the information to your buyer.