Rehabbers! Know ALL the Costs to Flip that House

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Every once in a while I catch an episode of Flip this House; I have to admit, it is entertaining and it does show the drama involved in fixing up a home. However, I am very amused when they show the final numbers. I have watched episodes where a first time rehabber has bumbled and stumbled through the process and yet still manages to make a profit in the end, according to the show. This and other shows might make one believe that a flip is a sure bet. When they do the numbers they normally list the Purchase price, the fix up costs, and the sales price. Wow, are they missing a bunch of stuff.

Please take my advice: Do NOT start that flip if those are the only categories of expenses that you are anticipating.

The REAL Costs of Flipping a House

Here are the actual costs of one of my recent flips.

real costs to flip a housePurchase Price:
Contract Prices: $213,000
Wholesaler: $12,937
Total Price: $225,937

*This deal was brought to me by a wholesaler. So my purchase price consisted of both the amount that I paid the owner (in this case a bank) and the finder’s fee that I paid the wholesaler.

Costs of Money:
3 Points: $7,312.50
Broker Fee: $2,437.50
Holding Costs: $9,500.00
Lender’s Lawyer: $1,220.00
Total Costs: $20,470.00

The cost of money or the cost of capital to me is everything that the lender charges for the use of his money. Note that in this case (which is pretty standard) I paid the lender 3 points and I paid the broker 1 point. Note that there is also a lawyer; this lawyer is not the title company. This is the lenders lawyer who writes up the contracts and the deed. He’s the one who does his very best to shackle me to ensure his client gets his money back. The lawyer represents me in no way at all, but I get the privilege of paying for his services. Most hard money lenders will either have this fee or some sort of administrative fee of about the same price.

Holding Costs: The holding costs in this case are just the interest I pay on the loan. In this case it was a hard money loan at 15% per year and I had the loan out for 4 months. I normally budget for 6 months of interest in a flip. This one worked out a little better but it still cost me nearly 10k just in holding costs.

Note that that in this case I also only borrowed $190,000. I put down 15% and I paid all of the points and closing costs in cash at closing. I then paid for all of the repairs out of pocket. If you are planning on borrowing all of the money for your deals then expect much higher costs of capital. In this case if I would have borrowed every dime of this project it would have cost me about $4,000 more in points and almost another $5,000 in holding costs. Not properly accounting for that additional $9,000 in capitol costs can be a career ending mistake.

Closing Costs When I bought:
Insurance: $2,357.44
City, County, State Tax: $3,973.23
Title Work: $1,523.00
Total Costs: $7,853.67

Note* these are the closing costs that I paid when I bought the property.

Insurance: Many people will snicker when they see what I pay for insurance. However, many people do flips in their personal name and get only a simple home owner’s policy for their flips. I highly recommend getting a commercial policy that is intended for a home that is undergoing major renovations. A homeowner’s policy is normally just a basic fire policy. A home that is undergoing major renovations has additional risks of personal injury to the workers and neighbors and you have a risk of builder defects. Yes, your builder’s insurance should cover that and I do check my contractor’s certificates of insurance, but I also take extra steps to make sure I’m as well covered as possible for the unexpected. I also do my flips in the name of my LLC, so that forces me to get a commercial type insurance. I highly recommend a simple LLC or corporation if you’re going to start flipping homes.

Title Work: I just lump everything in this category that has to do with conveying the title. An example of title cost to me are the title search, the title company fee, the abstract, recording, courier fees, etc. These costs vary greatly from state to state. You can call some local title companies and get a feel for these expenses before you commit to a deal.

General Contractor: $47,948.28
Mold Remediation: $6,950.00
Kitchen Cabinets and Countertops (Materials only): $5,415.50
Misc Materials: $5,409.59
Appliances: $3,771.45
Utilities: $326.62
Total Repair Costs: $69,821.44

I could write an entire post on the costs of repairs! Most people know to account for repairs, although, most people I know greatly underestimate repairs. In this case we did a pretty extensive rehab. There was a mold issue so we gutted the basement installed a sump pump system and a vapor barrier; we treated spot mold upstairs (all by a certified mold company). We did a complete remodel of the kitchen, and 2 bathrooms. I work with a good licensed and certified general contractor so he handles or oversees most every aspect of the job. The material items listed were things I paid for outside the contract with the general.

Construction costs vary depending on location. Get to know your construction costs. You can’t hardly paint and carpet a simple rambler for less than $10,000 in my area, but I know many people who have budgeted far less for it. If you are not real sure of the costs of repairs then don’t guess, get a bid from a reputable contractor.

Realtor Fee: $25,200.00

Many people think they’re going to sell the home themselves. Well if you’re determined to do that then make sure you account for marketing. There will be a few hundred dollars in signs and flyers if you do it right. I highly recommend paying a fee to get your home listed in the MLS and then budget to pay a Realtor 3% of the home’s sells price if a Realtor should bring you a buyer. You are cutting out a massive portion of potential homebuyers if you are not able and willing to work with Realtors. In full disclosure, I am a licensed Realtor; even as a licensed and active Realtor I almost never find the buyer myself. 99% of the time another Realtor has my buyer.

Closing Costs at the Sale:
County Tax: $291.66
Title: $1,071.00
Home Warranty: $405.00
Total Cost: $1,767.66

Closing costs at Sale are similar to the closing costs when you buy. I usually budget to pay at least some of the buyer closing costs. In this case I was lucky. The buyers paid all of their own closing costs.

Final Analysis

Total cost of this project was $351,049.77. That is $125,112.77 above and beyond the purchase price. I can’t count how many times someone has come to me with a deal and bragged that there is $100,000 of equity in the deal. Well, if there would have only been $100,000 of equity in this deal then I would have been working for the privilege of loosing $25,112.77. I don’t like paying to work. I like getting paid for my work. In this case the final sales price was $420,000. I did very well on the project because I was confident in what the market would bare, what the market demanded and what it would cost me to meet those demands.

About Author

Justin Pierce

Justin’s work ethics and values are based on his small town western upbringing and eight years of active duty in the United States Marine Corps. He currently resides in the D.C. area. He holds a BA in Management, a Masters in Business Administration and an active Virginia Real Estate Agent license.


  1. Wow, I remember when I first start wholesaling for rehabbers. I used to always get pissed when I’d bring them a deal with alot of equity in it and they tell me it wasn’t a deal. Even after compensating for the repairs, they still said it wasn’t a deal. lol It only makes sense that all the other costs were a factor. These types of costs you mentioned in the post are key costs that wholesalers need to factor in when ensuring the rehabber will get a really good deal and also so they won’t waste time getting certain properties under contract. I still watch Flip this house too. lol
    .-= J. Lamar Ferren´s last blog ..Michael Jake Reveals The Best Part Of Any Real Estate Deal =-.

  2. AWESOME POST, JUSTIN! It is amazing that most people have no clue about all the other costs associated with a flip . . . then again, there aren’t many people out there educating them.

    We will be showcasing this one for a while to help get the word out . . . good job!

  3. Wow! I like your breakdown on the numbers.

    What size house is it and where is it located? I saw the $420k price and was surprised. However, I do live in Chattanooga, TN.

    Also, have you given any thought to using a local bank for lending? Or have they tightened up so much that it’s hard to get them to lend on these projects anymore? Those points, lawyer fees, and interest rates are a high hurdle.

    Great post! I think it’s a nice realistic look at house flipping.

  4. Excellent post! Thank you for laying all this out in layman’s terms. All too often I hear comments from people who think I make “TONS” of cash on a flip. Those people don’t realize 90% of the costs associated with a flip. They just think that I paint and carpet and resell then stuff $50K profit in my pocket….not so fast!

  5. J. Lamar,

    Thanks for the comment. I really hoped this post would reach some wholesalers. I hate how people act like I’m crook when I turn down a deal. Believe me, if I could take more deals from wholesaler I would.

    The other thing I find is that most everybody outside of the construction field grossly under prices the repairs. I am still amazed at how much it costs me to fix up a place. But that is a whole other topic. I’m going to dedicate a post to that subject here soon.

    Thanks again,
    Justin Pierce

  6. Michael,

    The home was a rambler located in Annandale Virginia. That is inside the Washington D.C. beltway. The home was not very big. It was about 1600 square feet if you include the basement.

    I haven’t found any good local banks around here that don’t act just like a national bank. I know what you’re saying. In Utah, where I also invest, I use a local credit union and they can do portfolio loans for me that are very reasonable.

    I have relationships with these private lenders. They’re expensive but I know they will close. I don’t want to risk a deal falling through at the last minute. It is so hard to find these deals that once I have one under contract I don’t want to take any chances, and, honeslty, I pay a premium on money for that assurance.

    Thanks for the comment.

    Justin Pierce

  7. Hey Justin,

    Just getting started in REO/flipping and I was wondering if you have a spreadsheet you use to do your calculations on finding good deals. Also, how do you go about finding hard money lenders? Do you need a Business Plan or is it a credit score/deal presentation situation?



  8. Ben,

    I just did a 3 part series on private lenders where I interviewed actual private lenders to answer those very questions. Check them out; I think you’ll find it useful. If you can’t find me email and I’ll get them to you.

    You probably don’t need a business plan yet. For now what you should work on is building a resume or portfolio as you complete deals. Private lenders do like to see experience but the majority of their decision is going to be based on the deal itself. They want to see lots of equity. They want a deal that’s so good that if they had to foreclose on it and dump it quickly they would still make money.

    I do use my own spreadsheet for evaluating deals. I just use Microsoft excel and I calculate the expenses I listed in this post line by line. I don’t really have any sort of plug and chug type of calculator. Every deal is so different. I would be very critical of any set calculator or simple percentage allocation. I do however see a great many flippers trying to invest like that. One of my good friends passed on a deal I am wrapping up now. The house was worth $550,000 after repair. I had a contract on the home for $300,000. The home only needed updating. She passed on the house because she said she will pay no more than 50% of the after repair value. I ended up going hog wild on the remodel, and got a contract on the home for $575,000. I will make about $100,000 on the deal after everything. That’s a great deal she missed out on because of some narrow criteria she has. My only criterion is that there is enough profit after expenses to make it worth the risk and effort. That’s business. Don’t shackle yourself. I am going to write a post in the next week or two on this topic. Stay tuned.


  9. Many thanks for the great piece. Of all the information out there in books, at meetings and on the internet, there seems to be a lack of real numbers that go into a deal, so this was refreshing.

  10. Thanks Jeff.


    You can find my series on Privat lending here:

    Or by just clicking on the link on my name at the top of all of my posts.

    Also, Ryan Moeller (another contributer to this blog) is currently doing a series on Private money. It might give you another good persective.

    Let me know if I can be of any help in your search. I’m happy to share what ever info I have.

    Justin Pierce

  11. Outstanding post Justin!

    As a veteran rehabber I know exactly what’s involved. All those house flipping shows give people such a false impression of what’s involved. Unfortunately, many people fall for the fantasy. It irked me so much that it prompted me to write a book on the topic.

    Again, great post!

  12. Very good post! Educational for wholesalers like me. I agree, the most difficult part is locating a true deal that takes into account all the real costs the rehabber will undertake.

    Thanks for sharing,

  13. Real good insight….provided good perspective for a “newbie”wanting to jump into the wholesale flipper market.I want to feel confident that I am offering a real deal when attempting to do a deal,and I want to develope an A-LIST BUYER when I do find one.Thanks.

  14. Definitely a great post – I’ve done approximately 7 rehabs in the last 2 years and even I forget some of the costs in times of excitement of a deal 🙂
    Must have been a pocket listing or something? I’m an agent as well — with your access to the MLS, I’m surprised that you had to pay a large wholesale fee for an MLS deal — must have been an MLS sniper!

  15. Brooks, I take deals where I find them. I’ll happily pay a wholesaler for a deal that’s surved up on a silver platter. That saves me a lot of time and effort. Plus, really good deals are not a dime a dozen. A rehabber would be a fool, in my oppinion, to pass on a deal just because they’re too proud to pay a finders fee. Yeah, you could probably call her a sniper but she was looking at a spot I wasn’t.

  16. I agree – a fool! It’s all a mindset I suppose. I’m actually wholesaling a deal to a friend of mine that snipes deals for himself like crazy! Usually when I mention a deal to him he’s already been inside of it and has his offer in. But on this one, it came from an online auction the bank was having – and a company that neither of us had ever heard of – so I was able to snipe the deal myself and we’re closing this coming Friday – Payday!!

  17. Excellent article. I have rehabbed personal property and want to start flipping. You outlined costs that many would not be aware of and I thank you. I agree with you on recommending an LLC or corp for flipping. I had an LLC when I held property in joint ownership and would not hesitate to form one again today. Many people don’t think of an LLC as a business, but that is what it is with its own FEIN # and Tax Return and it own bank account.

    I thank you again for this article as it came at the appropriate time, when I just am starting to think about flipping and doing it REO’s.

  18. Just Came across some of your articles. All very good, especially this one. I do have a few years experience in real estate, mainly with buy & holds. But flipping is a different breed. Thank you for all the items some of us may have missed!

  19. To be fair, some of the flipping shows showed the negative side as well. I remember watching “Property Ladder” from a few years back and there were 2 episodes I remember specifically. One was a team of 3 buddies new to real estate investing that all quit their day jobs to do a higher-end rehab. They screwed it up leaving only 1 of the 3 left in the property and that guy had to resell to another rehabber for minimal profit just to get out of it before the whole thing went under.
    Another episode was an African American gentleman who did a single family flip (he turned a whole 2nd floor bedroom into a single, horrible bathroom) and could not sell his terrible rehab. I think he had to move into the house to avoid losing it completely while his poor wife continued to pay all the bills. Neither of the above was a “Get Rich Quick” success story and each episode ended showing little to no profit made on the deal.

  20. Dee, that is true. In general, however, I think the flipping shows leave a lot out. I think my point was simply that any person should do more homework before they dive in. It’s ok if these shows inspire you but they should inspire you to seek more knowledge on the process before you make that first offer.

    Thanks for taking the time.

  21. Thank you for sharing this article. One of the things we are dealing with in our market right now; and, I imagine it is the same for many other markets as well, is that there are a lot of people who are paying too much for properties because they just jumped into this without doing their homework, making it difficult for those of us who do factor in all of our costs to get any deals. I actually am friends with a gentleman who just “thought it would be fun to try rehabbing a property since foreclosures are so abundant right now.” Several months later, after his rehab was nearing completion and he was negotiating with a buyer, his story changed to, “We have to pay property taxes for the time we owned the home?” and, “I can’t afford to do all the finishing touches the buyer is asking me to do. We won’t make any money that way!” Thus the saga of a deal that wasn’t such a deal after all. Rather than running any numbers, he just targets the homes that are selling for really cheap and automatically assumes they are deals. I want to explain deal analysis to him because I feel it is my responsibility to share this knowledge with other investors to avoid having them fail; but, I am not sure how to approach him about it. Any suggestions would be greatly appreciated.

  22. Kristie,

    There is plenty of that in my market as well. I think this guy has already learned a big lesson. You can pass him this article to help the process. I find that sharing liturature is a good way to start conversations. Good luck.


  23. What a great article – and I have just learned this lesson!
    I was trying to be a wholesaler and couldn;t quite understand why I could not sell, what I thought, were great deals. So I decided to put my money where my mouth was, and am flipping one of my properties myself.
    I am using a hard money lender. I had accounted for points, holding costs and hard money lender fees, but the things I missed:
    Insurance, Hold back fees (where the lender holds back a portio of the loan and doles it out on a draw.) Also, the bank had a max closing cost allowance, and so I landed up paying a lot more in closing costs on acquisition than I had barganed for. These fees really are biting me. I have to pay the inspector $250 and the title company $100 per draw! By my calcs, I thought we had a huge spread – that has dwindled. I am still part way through – and I hope I make some money on this deal. It sure has taught me what to look for next time I want to wholesale!

  24. john milliken on

    late to the party but good read. was going crazy at the money going away with each step until the sold for 420K at the end. thought you were over budget, and gonna lose big time,lol.

  25. Justin, great article but you made it far too hard on yourself..While I don’t know how it is where you are as far as lenders go, here it’s fairly lax..Ways you could have made it easier:

    1. Use a private lender or see if your state has the equivalent of an FHA 203k loan..Here, it’s only 3% down, no points, no pre-pay penalty and only 4.25%/month..While they’re for owner occupiers, your lender may let you use it for flips. Of course if you like the way you’re doing it then more power to you..

    2. Hire a contractor, unless you like to work..

    Of course this is easy for me to say b/c my realtor and wholesaler are sending me props from $20-$30k…Obviously they’re fixer uppers which is where I’m concentrating for now..

    Although I’m fairly new to the game, I already have an appraiser, a title co., a wholesaler, a realtor and a lender..Finding an honest and competent contractor is

    Anywhoo, good stuff and a nice eye opener..

  26. Jorge,

    It doesn’t matter if you use a contractor or what kind of loan you get. The point of the article was to illistrate some of the many costs that most people overlook or underestimate.

    Big warning here for you since you’re new to the game: getting a contractor doesn’t free you from the need to know your construction costs. You’re not going to be able to get a contractor to go bid every house you want to make an offer on. You will wear your contractor out real quick. The biggest mistake most people make is thinking they’re going to completely remodel a home for a few thousand dollars. In my area it’s hard to just carpet and paint a house for under $10,000.

    You still have to know your costs, no matter where you are or who you hire. This is no passive income gig.

    Thanks for reading.

  27. Justin, well of course I have to know construction costs b/c that’s figured into the loan amount..but yes, closing costs are almost always overlooked by “wholesalers” and as far as wearing out a contractor, I plan on having at least 3…I’m only planning on doing 3-4 fix and flips a year b/c w/ a full time job that’s all i’d really have time for

  28. Justin,

    This is a very nice post, and it’s awesome that you’re still active in the comments 4 years after posting. I’m looking to do my first flip, but in a much different price range. It’s a Fannie Mae REO listed at $33k in the Kansas City suburbs.

    My question: Do you think it’s reasonable to take the percentages from your Costs of Money and Closing Costs and apply those for my estimates? Adding both together you were at a bit over 13%, which applied to this house is $4400.

  29. Thanks Justin! About LLCs – when do you suggest forming one? I know too many people who have formed them, then never actually flipped a property, or are on their first flip and have no other assets to speak of (outside of the property being flipped).

  30. Justin Pierce


    If you are using hard money then 12% and 4 points seems to be pretty standard. So, I’ll use those numbers as an example. I like to assume that I’ll have a project done in 6 months so for a rough estimate I figure 6% interest (interest rate is on a per year basis so if I’m turning the project in half a year I’ll only pay half the interest) and 4% in the points for the total project. So I would plug in 10% for cost of money as a rough upfront estimate. If you are doing a light (carpet and paint) flip then you might expect to turn the home much faster and you’d have to adjust. If you’re doing a major addition you might need to estimate a longer period. Closing costs vary significantly from town to town so you’ll have to base that on your local.

  31. Justin Pierce


    I do have an LLC. The LLC helps me keep things separate for accounting purposes. Some people say that you don’t need an LLC just get good liability and umbrella insurance policies. I leave those arguments to the attorneys. It’s not hard to set up an LLC. You can use legal zoom or and do if for about $500. That’s a pretty cheap little piece of extra security.

    If you’re going to use a conventional loan then you might not even bother LLCing because the bank probably is not going to lend to an LLC.

    All and all I would say you should put together some sort of entity if you really think you’re going to start operating. It looks more professional. It keeps things separate from your personal and it does provide another layer of legal protection.

  32. Justin, Great advice. An investor definitely needs an LLC for legal protection, especially if you partner with someone. Partners don’t always see eye-to-eye and you can be sued by your partner as well as others you do business with.

  33. What an excellent article! So many people that I talk to who tell me about properties that they think are deals but they have no idea about all the costs involved. Thanks for sharing your experience – its very validating!

    • What about taxes when you go to sell the property? Seems like you would be breaking even after paying 35% short term tax on profit from original sale price? Disclosure: I am a newbie, please be gentle if I am missing something obvious.

  34. Kathleen Nash

    Thanks Justin, indeed a good article for newbie rehabber. There are two cost you may also want to consider: one is possible permit cost, another one is architect cost. Sometime if you replace a deck on the slope, or structural change, you may need a permit to do it. Permit can not be obtained in a day or two. It normally takes from 6 to 8 weeks in WA. During this time, you will have extra carrying cost. If you like the look after rehab be accepted by most people, I would recommend ask architect to do the interior design. This will cost you extra money.

    Your point is very important to rehabbers and even someone want to start new construction. The cost is not as simple as you thought. And there are so many details you might miss which could add up your total up a lot. This will make the deal from profit to a loss. I am doing new construction RSF home in WA, the process is so long and there are so many costs which were not on my budget when I purchased land. Luckily enough, the piece of land I bought was on a great location, I can still make it work.

    Anyway, thank you for posting. I will definitely follow your post.


    • Ruth Bayang

      @Kathleen Nash, the permit process varies from county to county. I did a flip in Tacoma (completed in March 2015) where permits took 1-2 DAYS instead of weeks. They vary from city to city as well. A friend of mine flipped in Lakewood (same county as Tacoma) but his took the 6-8 weeks you mentioned. Wish it was all uniform everywhere!

    • Justin Pierce


      You are right. This deal only required a basic home renovation permit which didn’t take much time at all. I try to avoid using architects, they are expensive. I have a lot of design and drawing experience so I opt to utilize draftsman when ever possible. If you’re doing a heavy lift project like a major addition or new construction then the design and permitting costs can be excessive. Utility hook can be even more expensive than permits.

      I just built a spec home in Arlington Virginia and the permit process took over a year.

      This article is not on that level. I recommend starting with basic rehab projects.

      Thanks for reading.


  35. Jamane Y.

    Thank you for this post Justin. I was trying to use the flip calulator for I house I want to flip. I know the house needs a lot of work. so I wanted my numbers to be good when I try to get financing. I’m glad to know what I should be including in the calculations. thanks again

    • Justin Pierce

      Thanks for reading. You should consider the tax implications on any income. However, in most flips you will not be looking at capital gains tax. If you own the property for less than a year then you’ll likely be paying income taxes. So it’s becomes pretty complicated to talk about because everyone are subject to different brackets and situations.

      A tax liability means that you already made money. A bigger concern is not your federal tax but beware of your local taxes. For example, some counties here in the D.C. area have gross sales taxes they asses to any local business including real estate investors. Gross sales tax collectors don’t care if you actually made money or not. You could lose $50k on a home you sold for $1M but the gross sales tax collector still want .032% or $3,200 for the privilege of losing money in their county.

      Taxes are very individualized. You should be aware of tax implications and have an overall strategy but it’s a subject that’s hard to discuss in generalities.

    • Justin Pierce

      Scott, thanks for reading. Yeah, I wrote this one a while ago. But, it seems even more relevant today. With more and more investors flooding the market, contractors once again busy and private money lenders raising their rates due to demand now is not the time to get optimistic about the numbers.

    • Justin Pierce

      Hard money is expensive. Right now private lender’s are getting more demand for their money. Some of them are seeing this as a trigger to raise their rates even more. It’s unwise in my opinion because they give little credit for experience level and charge everyone the same high rates. That lack of screening is another recipe for disaster, especially since a fair number of private lenders really don’t know how to screen a deal or determine value. Either way, it’s bad news for flippers.

  36. Andrew Daniel


    Man this article was a real eye opener for me as I am getting started as a wholesaler. But a lot of the numbers, percentages, points, etc. aren’t making a lot of sense to me. Do you, or anyone else on this post, have any kind of calculator and/or maybe a collection of resources that would make it easier on me? I have used the Wholesale MAO Calculator here on Bigger Pockets and feel like I’m basically guessing on all of the percentages and inputs when it comes to anything besides the Rehab costs. I want to be very well informed on this end not only for my potential clients but also for in the future as I would like to expand my business to other areas of the business including flipping.



    • Justin Pierce

      Andrew, Sorry, I really don’t like calculators. Every deal is different and I think a calculator can get you in trouble if you’re not specifically thinking about each and every line item number on each and every individual deal.

      Location has a lot to do with your costs. The biggest factor is your construction costs. I don’t care what anyone tells you, there is no standard rate for construction work. You can easily have a 50% difference in costs from the same contractor on different dates for very similar work.

      You have to build relationships with contractors. I think it’s the most difficult part of the job. Once you’ve worked with a contractor on a few jobs you can start to get an understanding between the two of you about what certain things costs. But, there’s lots of risk and unknowns on your first deals.

      The only deals I’ve ever had gone bad where due to poor performance by a contractor. A good contractor can’t save a bad deal but a bad contractor can decimate the biggest margins.

      You CAN determine things like you closing costs by talking to a title company. You can work out about what percent of a deal will equal the closing costs. And you can get a feel for your capital expense but even then there’s a lot of possible variations.

      There’s no way to be 100% prepare, my friend. At some point you just have to take the plunge or don’t.

        • Justin Pierce


          Points, in this case, is a cost of the loan. 1 point equals 1% of the money borrowed. Private or Hard Loans will often be something like 12% (calculated on an anual bases) and 4 points. So if I borrowed $100k and had to pay 1 point I would pay $1,000. It seems there is a mistake in this post. I put that I paid 3 points but I also paid an additional point to the loan broker for a total of 4 points. I borrowed about $190k so the cost is .04 X $190K. I did this deal back in 2009 so I can’t remember the details.

    • Justin Pierce

      Jeremy, When a wholesaler brings me a deal I do a basic assessment in my office based on comparable sales data and repair costs based on square footage and home features. With that I come up with a price range I’m willing to pay. If the wholesalers price is close to my price then I’ll go look at the home or have someone go look at the home. If we’re not even close then I will not pursue the deal any further.

  37. Justin Pierce

    The realtor fees I have listed here is 6%. The final outsale price was $420,000 and I paid $25,200 in realtor fees. You might be comparing the realtor fees to the purchase price. This deal was a long time ago. Thanks for reading.

    • Justin Pierce

      Amber, I go direct to the seller. I still make the occasional offer on a MLS listed home but the success rate is extremely low. Internet advertising, networking and direct mail is where I’m getting my best leads but the deals are real scarce these days. I let a lot go.

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