As the final part of our cautionary morning tale of real estate investing, the Home section of the NYPost pours cold water on our dream of making a killing by buying and flipping apartments:
Don't forget transaction costs. Say a property costs $2.178 million, and sells for $2.5 million. You've cleared $322,000, right?Almost enough to fix that caved-in ceiling!
Not so fast. You'll have to pay the city and state transfer tax of 1.825 percent, the closing costs of 2 percent and the brokers' commission of some 6 percent for reselling the property. That blows through nearly a quarter-mill right there. Then there's the cost of attorneys for both buying and selling, maybe $5,000, and you have a mortgage recording tax of 2.75 percent (in this case, $48,000). The end result: You've made less than $20,000.
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