How Much Does it Cost to Flip a House?
Apr 24, 2023
Are you ready to dive into the exciting, sometimes nail-biting, and always entertaining world of house flipping? In today's post, we're going to answer the million-dollar question (or at least we hope it's not a million dollars): how much does it cost to flip a house?
Cost to Flip a House
Flipping houses is a bit like going to Vegas – sometimes you win big, and sometimes you lose your shirt. But don't worry, I've got you covered with tips and advice on how to flip a house without spending a bundle of money.
Let's talk about the most significant aspect of house flipping costs: renovation and rehab costs. These can vary greatly depending on the property's condition and your desired after-repair value (ARV). Cosmetic repairs, such as paint and flooring, may be relatively affordable. However, if structural or mechanical issues arise, you're budget can evaporate quickly. Labor costs can add up when hiring contractors for extensive renovations, so it's essential to budget accordingly.
Demolition and debris removal
Flipping a house means major renovation work, and that means money – lots of it. Let's start with everyone's favorite: the demolition phase. You may find yourself living out your childhood dreams of being a superhero, smashing through walls with a sledgehammer like the Hulk. But beware, with great power comes great responsibility (and a great hole in your wallet).
This will normally cost anywhere from $2,000 to $5,000. To save money, rent a dumpster and buy a sawzall. With a little sweat, you could perform the demo on your own for less than $500.
Next up, it's time to address the foundation and structural issues. Fixing these bad boys is essential when it's time for the buyer's inspection. Foundation repairs can cost anywhere from $5,000 to $10,000. And if you discover structural issues? Well, let's just say you might want to start practicing your deep breathing exercises. Those can cost up to $30,000. Our advice is to avoid homes that have foundation or structural problems unless you're truly a home flipping veteran or have deep experience in construction.
It's common for a home flip project to need a new roof. Luckily these can be tackled in a couple days. A new roof will set you back $10,000 to $15,000 for a typical 2,500 square foot home.
Kitchen & baths
Of course, you can't forget about the all-important interior renovations. Kitchens and bathrooms are where you can really make your house shine (and fetch a higher price). You might be surprised at how quickly those stainless steel appliances and marble countertops add up, though. A full kitchen remodel can cost $20,000 or more, and bathrooms can range from $6,000 to $15,000. If we have to add in more plumbing or electrical work, tack on another $5,000.
Now, let's not forget about the exterior. Curb appeal, baby! This is where first impressions are made, so you'll want to invest in some landscaping, painting, and maybe even a white picket fence. This can cost anywhere from $5,000 to $15,000, depending on how fancy you want to get.
Total cost to flip a house
So, let's do some quick math (ugh, math). If we add up all these costs, we're looking at a ballpark figure of around $60,000 to $70,000 for flipping that $300,000 house. But hey, who's counting?
Keep in mind that you'll need to consider the TOTAL acquisition cost of your investment property, not just the purchase price. This includes the down payment, loan origination fees, and closing costs. Closing costs often encompass property taxes, title insurance, and title company or attorney fees.
Once you've purchased the property, carrying costs come into play. As a result, you'll also need to budget for financing costs, such as interest payments during the time you own the property.
After you've completed the flipping process, you'll have to consider selling costs. These include real estate agent fees, transfer taxes, and any additional closing costs.
Lastly, you should also account for potential capital gains taxes if you sell the house for a profit - which is certainly the goal!
Don't let these numbers scare you away, though. The steps to flip a house can be a thrilling, rewarding, and sometimes hilarious experience (like the time I accidentally painted myself into a corner – literally). With patience, planning, and a bit of luck, you just might end up on top, with a freshly flipped house and a pocketful of profit.
Happy flipping, folks!