So just watched this episode and it's the first one I've seen where there is some talk of actual profit from escrow. They mention after the sale that they received a check of $85,000 from close of escrow.

If we assume that they got 100% financing on the buying price of $140k, the actual total closing costs are the selling price $250k, minus the loan payoff (still ~$140k), minus the final check $85. So closing costs would be $25K which including broker and other costs is 10% of the selling price which sounds about right as there could have been a credit back to the buyer for something.

Now the show makes it seem like this would be the actual profit, but of course it's not. We need to subtract the fixup costs of $12k, 7 months of holding cost with the mortgage @$1200/mo ($8.4k), 6mo of property taxes estimated at $1.4k, and the buying closing costs for the loan/etc estimated at 2% of the buying price ($2.8k). So we have $12k + $8.4k + $1.4k + $2.8k = ~ $25K. So the actual profit is closer to $60,000. Does this seem accurate or am I missing something.

jcg61

I agree.. that is the one erroneous flaw I see with these programs. It seems they never include realtor costs.. etc..

It's about time that people started dicussing the soft costs of flipping. It is extremely misleading not to include all the soft costs,when bragging about profits on TV. You have to consider the realestate agent,loan interest,points,stamps (MA.) attorny's fees and the IRS.before taking on any project. Some people watching the show might think the potential profit numbers that are quoted are all gravy! NOT SO FAST! Pay all your soft costs first! Then see what's left over.