How to Save Money on Real Estate in Suffolk County

The ultra-hot real estate market continues to rage, sending costs skyrocketing for sellers, buyers, and house flippers alike. The good news: home inventory levels in Suffolk County have increased 4.7% between March and April 2022. More inventory can help to keep costs in check because it gives buyers more options (and more leverage).

More inventory isn’t always enough to help real estate investors save money. Sure, it might spur characteristics of a buyer’s market if inventory starts to outnumber sellers. This alone can help make home prices more attractive, which can also help to lower closing costs. But buyers are at the whim of the market and have no control over its conditions.

So, what else can buyers do to save money on real estate in Suffolk County? Here are some ways to make your house buying and flipping budget go further.

1. Use a reputable Realtor.

Your real estate agent can make or break a deal, especially when it comes to saving you money. They go to bat for you during the negotiations and can help you get an attractive offer that works for your budget.

Plus, they can be forward-thinking in coming up with contingencies and other ideas that will help you keep money in your pocket. For example, they might suggest a leaseback, where the seller of the home can stay in it and pay you rent each month for a certain period of time. If you’re flipping the home, you can start upgrading the outside while still earning revenue from your home purchase.

A good real estate agent will also come in handy when it’s time to sell your flip. When you have a good relationship with your realtor, they’ll know more about what you will and won’t budge on. They’ll also know your properties inside and out and can be a better matchmaker between you and your buyers.

2. Ask for closing costs.

One of the easiest ways house flippers can save money on real estate is to ask the seller to help with closing costs. In a real estate transactions, buyers and sellers each pay part of the closing costs. For buyers, the amount is anywhere between 3-6% of the home’s final selling price. For a $200,000 home, you’d pay about $6,000 to $12,000 in closing costs.

That’s quite a chunk of change. Imagine what you could do if you could put that money toward your house flipping?

One way to get out from under the weight of closing costs is to ask the seller to cover it for you. They might allow a certain amount, or they might even pay the whole bill. Work with your real estate agent to find the best approach.

3. Keep an eye on interest rates.

If you’re financing your house flips with a mortgage, you can save money in the interim just through interest. Every digit matters in a mortgage rate — for instance, the current average mortgage rate for a 30-year fixed loan is 5.82%. That breaks down to a monthly payment of $1,177 on a $200,000 loan. Of that, about $970 goes straight to interest.

Now, compare that to a mortgage with a 4.82% interest rate. On the same loan, your monthly payment would be $1,052, with $803 going to the mortgage.

On average, it takes about 6-12 weeks to buy and flip a home, if everything goes according to schedule. This means you’ll end up making three mortgage payments or so, and lose about $2400-$2900 to interest alone.

The remedy: shop around for your mortgage. Keep an eye on interest rates and know when prices may start to rise. Interest rate increases can impact your home flipping budget. If they increase too much, you may need to find alternative means of buying and flipping your home.

4. Save enough to avoid private mortgage insurance

Private mortgage insurance (PMI) can add unnecessary costs to your home buying process. Lenders usually require PMI when you put down less than 20%. You’ll have to pay PMI until you own at least 20% equity in the home. PMI is expensive and may cost you as much as $50 to $70 per $100,000 borrowed. Even if you flip a home in three months, you’re wasting nearly $500 on a $200,000 home in that time.

5. Improve your credit score.

If you’re concerned about wasting money on interest, working on your credit score may help you. Lenders may offer a more favorable interest rate to those who have great credit. As shared earlier, even a slight drop in interest can save you hundreds of dollars over the course of your flip.

6. Build a network of house flipper helpers.

No two house flips are quite alike. Every home will have unique challenges and “fixes” to tackle, which means you’ll partner with a range of construction professionals to help. It’s a good idea to build your network of helpers before you need them. Ask about their rates, see examples of their work, and know how they can add value to your flip. This saves you time in finding and vetting contractors when you need them so you can keep your projects moving forward.

7. Takes a hands-free approach to house flipping.

House flipping takes quite the time and energy investment. When you’re all tied up on one project, lots of properties and opportunities may pass you by. But a passive approach to house flipping can help you work on more projects at once, ensuring better coverage in your market and more sources of revenue.

Hamptons Flips is redefining the practice of flipping for a profit by supporting real estate investors with passive income. Takes a hands-free approach to every flip to free up your schedule and make more money. Contact our team to learn more!