Simulation: a fictional property for practice.

The same flip, but nothing goes to plan

Permits take longer, the repair bill grows 15% and prices dip 5%. See what happens to the same $210,000 flip.

A fictional continuation of the $210,000 flip. All costs and rates are example assumptions.

• Plan: 6 months, $60,000 of repairs, sell at $340,000
• What happened: Permit delays and a contractor change: 10 months
• Repairs: $69,000, 15% over budget
• Sale price: $323,000, 5% lower after the market slowed

Mission 1: Which risks should a flip budget cover?

Pick all you would budget for before buying.

• Permit and inspection delays
• Repairs running over budget
• A lower sale price or a slower sale
• Prices will keep rising, so no cushion is needed

Every month adds loan interest, taxes, insurance and utilities.

Mission 2: The result

• Purchase and buying costs: $214,200
• Repairs: $69,000
• Loan points (2% of $258,000): $5,160
• Loan interest, 10 months at 11%: $23,650
• Holding costs, 10 months: $6,000
• Selling costs (8% of $323,000): $25,840
• Total cost: $343,850
• Result: A loss of about $20,850

A $16,000 planned profit became a $21,000 loss with ordinary problems. Run the calculator’s stress test before you buy.

Knowing this, would you have bought at $210,000?

Buy, investigate or pass? Work through the drill to see what an experienced investor would weigh.