Repairs are typically the biggest expenses involved in flipping a home or distressed property. But they aren’t the only costs you’ll face.
If you’re working with a listing agent to sell your renovated home, you’ll need to pay them a commission. If you’re using a mortgage to finance the home purchase, you’ll need to pay fees like title insurance and closing costs to your mortgage lender and other third parties. These costs will vary, but you can expect to pay 3% – 6% of your loan amount in closing costs.
Carrying costs, also called holding costs, are another expense. As the name suggests, these are the costs you’ll take on before selling a house you’ve purchased. Carrying costs could include homeowners insurance, property taxes, utility bills and any property maintenance you need to do before flipping your property. The amount you’ll pay in holding costs depends in part on the state where your home is located and the amount of time you plan to hold onto the home before reselling.