• CMG MORTGAGE, INC. NMLS #1820

Counting the Costs of Rehab Projects

  • July 13, 2017

Investing in a home to sell is one way to earn a profit on a real estate investment.  “Home flipping” is gaining popularity through shows like Flip or Flop.  Christina El Moussa, star of Flip or Flop, sat down with Zillow to discuss the costs of rehabilitation projects that potential flippers need to consider.

In the case of a rehabilitation project, the buyer has to factor the cost of the home purchase, the rehab team, the rehab project, the cost of ownership, and the cost of selling into their budget ahead of time. 

A rehab team is more than just a contractor, the buyer should hire an attorney, lender, real estate agent, insurance agent, and home inspector as well to ensure a protected and safe transaction.

Buying an investment home is just like buying a home for occupancy.  The cost of the home purchase will include the purchase price, home inspection, home appraisal, closing costs, and any other associated fees. 

The total cost of the rehabilitation project will include contractor fees, permits, and all of the work completed on the home.  Hiring a licensed contractor and completing walkthroughs before and after the project is completed can help protect the buyer.

In some cases, the home will not sell as quickly as anticipated.  When this happens, the buyer needs to be prepared for the cost of ownership of the property including mortgage payments, property taxes, insurance, utilities, and upkeep.  Before investing in a real estate property to sell, the buyer needs to evaluate whether or not they can carry the costs for multiple properties. 

When it is time to sell the investment property, this transaction will incur additional costs also.  Typically, the sale of the house will include real estate commission, staging costs, attorney fees, and other closing costs.

Before making a real estate investment, it is best practice to consult a financial advisor or real estate professional.  With a flexible budget, and the right financial planning, the rehabilitation and sale of an investment property can be profitable. 

 

Sources: Zillow

Conan Henry
Loan Officer
NMLS # 882792
Branch NMLS # 1370156


Conan Henry

PHONE: (936) 499-6740
chenry@cmgfi.com

APPLY NOW
CMG Image
© CMG Financial, All Rights Reserved. CMG Financial is a registered trade name of CMG Mortgage, Inc., NMLS ID #1820 in most, but not all states. CMG Mortgage, Inc. is an equal opportunity lender with corporate office located at 3160 Crow Canyon Road, Suite 400, San Ramon, CA 94583 888-264-4663. Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act No. 4150025; AK #AK1820; AZ #0903132; Colorado regulated by the Division of Real Estate; Georgia Residential Mortgage Licensee #15438; Illinois Residential Mortgage Licensee; Kansas Licensed Mortgage Company #MC.0001160; Massachusetts Mortgage Lender License #MC1820 and Mortgage Broker License #MC1820; Mississippi Licensed Mortgage Company Licensed by the Mississippi Department of Banking and Consumer Finance; Licensed by the New Hampshire Banking Department; Licensed by the NJ Department of Banking and Insurance; Licensed Mortgage Banker – NYS Department of Financial Services; Ohio Mortgage Broker Act Mortgage Banker Exemption #MBMB.850204.000; Licensed by the Oregon Division of Financial Regulation #ML-3000; Rhode Island Licensed Lender #20142986LL; and Licensed by the Virginia State Corporation Commission #MC-5521. CMG Mortgage, Inc. is licensed in all 50 states and the District of Columbia. Offer of credit is subject to credit approval. For information about our company, please visit us at www.cmgfi.com. To verify our complete list of state licenses, please visit www.cmgfi.com/corporate/licensing and NMLS Consumer Access (www.nmlsconsumeraccess.org).