Posted by Sharif on February 23, 2001 at 11:29:55:
What I meant was that a bank wouldn’t want to finance me because I already carry a large mortgage for my current home. The only way (in my opinion) a bank will finance me for a second mortgage is IF my income increases, which won’t be happening anytime soon.
Does property flipping basically mean “fixer uppers”? Based on your example, I would need ‘out of pocket money’ to complete the fix up and other repairs before I sell.
What would you recommend as a starter? I have a few G’s saved, which I’d rather not touch.
I’m not sure what you mean as to why a bank would want to finance another property if you already have a mortgage on one.
Banks are in the business to make loans. They earn a great deal of money on making interest from those loans.
Property “flipping” is profitable when you buy the property at the right price. Most investors that do property flips want to make a minimum of $15,000 or more after all expenses.
Let’s say you could purchase or control a property for $45,000. It needs $10,000 in fix up cost and other expenses. Assume you could conservatively sell the property for $70,000.
$45k purchase
$10k fix up and other expenses
$55k into property
$70k sales price
$15k profit
All of it depends on how much money you will make after ALL EXPENSES. This means fix up costs, realtor fees, closing costs, etc.
You figure all of your approximate expenses, what the property can CONSERVATIVELY sell for, then you arrive at the maximum price you should buy the property for.