What’s the worst that can happen when flipping a house?
Let’s say I buy a $100k house to flip with a goal of a 20% profit ($20k). Let’s say I underestimate the repair costs by $30k. So I’d lose $10k. But since I decided to live in the house, I don’t lose $5k on carrying costs and since I put $4k of sweat equity into it, I’ve really only lost $1k total... and this is a worst case scenario. What if I get lucky and make $50k on this flip?
- SlumlordLv 71 month agoFavourite answer
If you are budgeting for a 20k profit, then a 50k profit is highly unlikely. I would look for a 30k-40k profit deal and if you are off by 10k on repairs and 10k on costs then you still make 10-20k. If you under budget reapirs by 30k on this small a deal then you really screwed up and have nobody to blame but yourself (unless there is some huge problem you just missed, like a bad foundation but even then, 30k is a huge miss).
- tiescoreLv 61 month ago
You buy the house for $100K, the repair costs are far above your expectations (which happens all the time) & run you $100K now you lose $96K with your $4K sweat equity.
- ErikLv 71 month ago
the house could fall on you
- SlickterpLv 71 month ago
Living in the house does not reduce the carrying costs. Carrying costs are based on the length of time the reno takes. You might save a little bit on insurance, etc, but if it's $5K, you took too long. Sweat equity is nice, but in flipping, actual dollars is what matters. You lost $5000 (assuming you actually saved the $5K in carrying costs, which you really will not, especially on a $100K house), and several months of time and energy.
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- 1 month ago
YOU lose a lot of money...........................................
- Anonymous1 month ago
Its highly unlikely you will make $50k on a $100k house. You really have no business flipping houses until you save up some capital. Dealing in cash is best.
- Anonymous1 month ago
Worst case scenario is that you are tied up in lawsuits.
- ALv 71 month ago
The worst that can happen is you put way more into it than planned and it is worth less than you invested. Sure you can live in it but you will no longer have the funds to flip another. The liklihood of making 50K on this house is very small