Purchase Amount | -$138,280 |
Fix Up Costs | - $29,443 |
Insurance | - $303 |
Utilities | - $517 |
| Costs Subtotal | - $168,543 |
Selling Price | $195,000 |
| Selling Costs | -$18,874 |
| Property Taxes | - $491 |
| Income Subtotal | $175,635 |
| Misc. LLC Expenses | - $400 |
| Profit | $6,692 |
| Time Property Held | 168 days |
Total Return (ROI) | 4.0% |
Annualized ROI | 8.6% |
Misc. LLC Expenses include the costs of running the business - a fax line, office supplies, etc. While not technically related to this property, this is the only property I've sold this year, so the profits of the entire LLC are really the same as the profits made by this one property.
Not the best ROI in the world and definitely below what I was shooting for. However, I'm reminded of an old adage of stock traders - never complain about a profit. If you compare these results to those of the last house I flipped, it's not so good. On the other hand, I owned the house for a shorter period of time and at least $3,000 of expenses were due to break-ins. If I hadn't had to spend that, my annualized ROI would be up around 12.5%. A lot of my profits from the last house were due to the red hot real estate market - since I had to hold the property longer, I was able to benefit from the run up in prices. In the current cooler market, I didn't get the rapid appreciation to help improve the ROI. My selling costs were also higher. To move the property quickly, I paid the buyer's agent 4% instead of the customary 3%. That cost me an extra $1,950. I also contributed 3% towards the buyer's closing costs and prepaids. This was another $5,850 that I paid on this sale that I didn't pay on the sale of the last house. However, given the relatively poor neighborhood, I knew when I bought the place that I would be required to contribute some money to the seller at closing since they would likely be cash poor.
My next post will go into the lessons I've learned from this property.
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