Posted on February 27, 2010 by Carole Somer

When you see a property listed for $179,999 and it needs approximately $18,000 in repairs, you subtract the difference. The seller will scream and holler that he listed the property low because of the condition, but you stand your grounds. If he wants full price, and the house is right at comparable sales, walk away from the offer. if you plan on the repairs costing $18,000 they will end up costing $20,000 or more. No house ever estimated comes in lower or exactly as planned.

So besides the repairs, you now have monthly mortgage payments to make each month, plus taxes and insurance. So now you are out $20,000 and approximately $817.11, including taxes and insurance for the mortgage payment. This was with 10% down. So now you are losing interest on the $16,000 that was in the bank earning four percent interest. That is a loss of $53.00 in interest each month, so if the house is off the market for four months and it takes three months to sell. That is a total of seven months of mortgage payments which equal $5717.77. You are losing $53.33 each month in interest for seven months at a total of $373.31. Now you have to pay closing cost to but the home and to sell the home. Figure on three percent on both sales.

Realtor commission will be 6 percent on the sale of the property. So to break even you need a lot of money. When deciding how to list the property, you must make a commission or it is not worth your time. Why in the world would you work for seven months to break even. So even if you find a so-called good deal, do the figures first and allow for all the expenses, not just the repairs.