Are You Doing Your Due Diligence Before Flipping Property in Portland?
If you’re considering flipping houses in Portland, it’s crucial to understand the expenses involved to maximize your returns. House flipping can be a lucrative investment strategy—but only if you manage your costs effectively.
Wondering what expenses you should account for in your house-flipping budget? To help you plan effectively, we’ve outlined seven of the biggest expenses you’ll encounter during the house flipping process. Knowing these costs upfront will allow you to budget smarter and avoid unexpected financial surprises along the way.
Acquisition Expenses
Acquisition expenses refer to the costs involved in purchasing the property. While the most obvious cost is the purchase price of the property, there are several other expenses to consider. These may include:
Demo And Renovation
Demo and renovation expenses are among the most significant costs when flipping a house. These costs cover the work required to transform the property, including:
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Demolition of outdated structures or features
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Renovations such as installing new cabinets, countertops, fixtures, and appliances
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Flooring updates like new carpets, hardwood, or tile
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Window replacements and other necessary upgrades
Labor Costs
Once you’ve gathered all the supplies and materials, the next major expense is labor. Even if you’re planning to handle a lot of the work yourself, there are certain tasks that may require professional assistance. You might need to hire:
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Contractors for specialized tasks
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Licensed technicians for plumbing, electrical, or HVAC work
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Laborers for general tasks, such as demolition or heavy lifting
Labor costs can vary significantly based on the complexity of the work and the local market. It’s essential to factor in these costs to ensure your project stays on track and within budget.
Carrying Costs
One expense that new house flippers often overlook is carrying costs—the ongoing costs of owning the property while it’s being flipped. These expenses include utilities such as:
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Power, gas, and water
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Property taxes and insurance
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Any mortgage or loan payments
These costs can accumulate quickly, especially if your project takes longer than expected. The longer you own the property, the higher these carrying costs will be. To maximize your profit, it’s essential to keep your timeline on track and complete renovations as efficiently as possible, minimizing the time you’re paying for these ongoing expenses.
The Extras (Dumpster Rental, Licensing And Permits)
There are plenty of extras that you need to account for in your budget but that you might not realize before you start. These include things like dumpster rental or tool rental or even bringing in lunch for the team! And don’t forget to make sure you have the right permits or you’ll end up with another expense — a fine!
Unexpected Surprises
No house flip is without its unexpected surprises, and they often come with additional costs. These surprises can range from issues like mold or termites to delays caused by inclement weather or unforeseen structural problems.
It’s essential to set aside a portion of your budget to account for these unexpected expenses, as they can significantly impact your timeline and profitability. Planning for the unexpected allows you to stay on track, even when the unforeseen arises.
Sales Costs
You will also incur costs to sell the property, including marketing and furniture rental (for staging). Be prepared for these costs to they don’t surprise you.
Summary
If you are counting the cost of your potential flip before you start, you’re wise to be asking, “what are the expenses associated with house flipping in Portland?” Make sure you account for these expenses in your budget. Expenses aren’t necessarily bad — after you all, you have to spend money to make money!