These are simply the costs you have attached to owning a property. Being aware of these costs is important as an investor. They include things like mortgage payments, property tax, insurance, owner paid utilities (for rentals), vacancy expenses, and maintenance costs. Our team members will be able to explain to you in detail the costs to be prepared for.
Closing costs are simply the price you pay to do business as a real estate investor. These closing costs vary based on your jurisdiction and the purchase/sale price of the property. Generally buyers should estimate closing costs to be around 3 percent to 5 percent of the purchase price of the property. Comparatively, sellers should expect their closing costs to run about 7 percent to 10 percent of their sale price.
As much as Realtors and mortgage brokers love their clients, we are in this business to make a living. Realtors and mortgage brokers only get paid when the transaction closes. Their commissions are part of the standard closing costs — which either or both the buyer and/or seller must pay. Traditionally, the seller pays the big one — the Realtor commissions — which are about 5 percent to 6 percent of the purchase price. Real Estate commissions are always negotiable. All parties have the right to negotiate what percent of the purchase or sales price they are willing to pay.
Capital Gains Tax
Real Estate investing is very beneficial when it comes to tax benefits. However, be aware of capital gains tax. All you flippers out there should make sure you have a sound tax strategy in place. This may also include sufficient profits in the pipeline. In addition, this may help to cover the capital gains tax exposure you create when you dramatically increase the value of your property in a short period of time for resale. Again, having a trusted team on your side is important. Corken + Company can help you get in touch with knowledgeable lenders to help you understand any taxes or costs associated with buying and selling.
When it comes to investing in real estate it is important to take all of these above aspects into account. Using the wisdom of those around you, having a solid real estate group to help you navigate the waters, and being flexible are all important components.
Contributions from: https://www.hgtv.com/lifestyle/real-estate/real-estate-investing