Buying your first house property for flipping business can be very exciting time. And although it might be fun to imagine how you are going to design the place and all the furniture you are going to buy, you need to think about some of the costs that come with buying your first house.
There is a lot more to buying a property and selling it than putting down a deposit and paying off a loan, so it is important to know about the real cost of fix and flip business before you get ready to buy.
This article will discuss four major cost considerations when you intend to invest in a fix and flip venture.
1- Stamp Duty
If you don’t already know, stamp duty is a tax that is imposed on the price of a purchased property by the government in your state or territory. Everyone has to pay this tax on their property, but the costs can differ depending on the state or territory that your property is in and if you are buying the property to live in or as an investment.
If you are a first buyer some states will give you a cheaper rate to pay. For example, in New South Wales if your property is under $650, 000 dollars, the government will wave the stamp duty for your first house property.
However, if your property is valued over this and you are not in NSW, you will need to factor paying for stamp duty into your budget.
2- Home Loan
If you are looking to buy your first house property, chances are that you won’t have enough money to pay for the property outright, which is why you save up for a deposit.
For most homes, you will need to save at least 10-20% of the purchase price of the property in order to get a loan from the bank for the rest of the money, but this cost will vary depending on your financial institution. You will also have to figure out how much you will be making in repayments each month when you are negotiating a deal on your home loan.
You need to be realistic about how much you are going to repay each month over a long period of time but you also need to try and repay your loan as quickly as you can to get on top of interest payments.
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Finding the middle can be tricky, so you may need to speak to a financial adviser to find the perfect middle ground. To learn more about home loans and how to calculate your repayments click here for more information.
3- Conveyancing Fees
If you buy a property that has been previously owned by someone else, you will need to pay conveyancing fees to have the property transferred into your name. And because this process usually involves at least 2 different parties (the buyer and the seller), there are usually other people involved to help moderate the transaction.
Most of the time you will need a solicitor or a conveyancer to look over any contracts or title deeds to make sure that everything is in order, which can cost money. Depending on the level of expertise of the professional that you choose and the amount of time spent on your case, you could pay a few hundred dollars, and that is before the actual fees are charged.
Then you will need to pay for things like land tax, access to the water supply and local council fees, which can all add up.
4- Building and Pest Inspections
A lot of people forget to do the proper inspections that you need to when you are looking to buy a new property. You need to get a professional to help you inspect your potential home so that you don’t get any nasty surprises down the road that can cost a lot of money to fix.
Also, if you find a fault in the property before you buy it such as structural damage or a pest problem that was not previously mentioned, you will have the option to opt-out of your contract or get a lower price on the property.
If you don’t do any of these necessary inspections before you purchase and move into your new property, you could end up paying a lot of money to fix a serious issue that would have been identified through the initial inspections.
So although it can cost a bit of money and take up your time to get any necessary inspections done to your new property before you buy, it is worth getting them done to save money in the long run.
The Bottom Line
It costs more money than you think to be a Property owner. There are a lot of hidden costs that most young people don’t know about when they start to save for their own home, so it is important to save more than you think you will need.
There are always going to be extra costs that you can’t plan for so you need to be smart and save when you can. And although it can seem daunting when you first begin the journey of being a property owner, eventually you will start to get on top of things and you won’t have to worry about saving as much as you used to.