How much are closing costs if I buy cash? Indy real estate investor fix and flip closing costs.

by | Indy Anna, Real Estate Investing

How much are closing costs if I buy cash? Indy real estate investor fix and flip closing costs.

Here are the closing costs you will pay if you buying cash as an Indiana real estate investor.  If you are out of the state then you should definitely know these numbers so this video is a basic intro for Indy real estate closing costs.  First of all, THANK YOU again for making this channel the number one channel for Indiana real estate on YouTube according google analytics and SocialBlade info for BigReia.com.

This is a quick video I made about  a Hero’s experiment…

How much are closing costs for a cash investor on Indiana real estate deals?  Indy Anna breaks down closing costs on cash deals.

Indy Anna explains:
– Basic closing costs for cash buyers
– Some Indiana information for closings
– The basics for all investors

I want to begin by saying this class is going to cover what many of you already know about closings costs.  The difference is that today there are a few things specific for Indiana that you and I are going to cover as well.

The point here is that by the time you are done with this video

– You’ll know how to quickly estimate closings costs on cash purchases in seconds
– You’ll have a total breakdown and list of the standard items and closing costs
– You’ll understand the different kinds of closing costs and how they are associated with the different kinds of financing, basically that how much you pay is based on how you got the money and you’ll start to see that here today.

I won’t be getting into rehab costs today, that’s going to be a separate class soon.  We will also go over the holding/carrying costs.  It is super important to know this because if you ignore these costs it can eat away at your profits and often ruin an entire deal or business.

Whether you are doing a Fix and Flip or Buy and Hold you have three basic costs:

– Closing costs of buying
– Holding costs
– Closing costs of selling (if flipping)

Since usually traditional bank financing is out of the picture, you have three basic ways of getting the money:
1.) You use your own cash
2.) You use private money
3.) You use hard money

I’ve explained the difference between all three in the past and in different video so for now we will just talk about using your own cash and the closing costs in buying.
– Later I’ll go over the closing costs when using private money and hard
money
– We won’t get into holding costs today, so this is JUST what you as a cash
buyer (using your own) will pay in closing costs to purchase
– Later we will get into the holding costs and closing costs of selling, right
now this is JUST with the buying and if you close with cash.
Remember the amount of cash you should have ready is about 50k – 150k.

When buying a property for cash…

Two things are going to happen; it’s going to close quicker (no loan time) and it’s going to be cheaper than buying with a loan (cash to close with zero loan fees).

No, it’s not typically a situation where you show up with a suitcase of money on a doorstep and walk away wit the keys, but it’s as close to it as you can get lol.

Here’s what you’re still looking at as far as closing costs go when buying with cash

● Real estate transfer taxes charged by the county and/or city
● Title insurance fee
● Processing and filing fees for forms being submitted to the
County Recorder
● Appraisal fee
● Home inspection fee
● Insurance

Now some of these are more ‘cafeteria style’ than others (picking and choosing what you want- like an inspection, 4 point, 5 point, doing it yourself, etc.)

I wanted to be sure to include insurance as well – you want your a$$ets covered, even in a rehab (proof in why would be in the deal I broke down for you last week that had some fire damage after it was flipped) According to the National Association of Insurance Commissioners (NAIC), home insurance rates averaged $1,211 a year in 2017 insurance

Now typically we aren’t dealing with a few items like HOA transfer fees but keep in mind you MAY come across those miscellaneous items in some cases.

With your 4 or 5 point inspection (what many investors choose) your costs are going to be cheaper than an end user (applying for a loan) inspection- and we’ve got people here in Indy to help with this as well.

Survey fees- well it’s a good idea to have an exact location of the lot lines/land but this is going to be less than $800. 

Now I’m not getting into realtor commissions here- and that’s going to be a situational thing (working with a wholesaler for example changes things) In Indiana, you don’t need an attorney to facilitate the sale of real property so unless you choose to work with one, this is one fee you can skip out on
as well. 

You’re going to have transfer tax, title insurance (you’ll want to make sure the title is indeed clear), title search fees, recording fees, and escrow fees.

It probably goes without saying, but closing dates will affect some things (like prorated rent on an active rental for a buyer credit), taxes etc. 

You can also possibly save by asking if the title insurance can be reissued if the property has been sold within the last couple of years.

Now I’m not getting into the nitty gritty of capital gains in this class but obviously some of these items are going to be taken into account when you sell on P&L statements- Legal fees, recording fees, survey fees, title insurance, etc. But this is where your tax advisor does their thing 😉

Earnest money deposit (held in escrow) usually 1-3% of the purchase price. Depending on how the purchase agreement is written you may or may not get this abc if the deal falls through (aka, pay attention!) 

Appraisal – this is going to be up to you as the cash buyer (because you’re not required to get one for a loan remember) $300-$400

Inspection – using a 4 point or 5 point ‘investor’ inspection (especially if you’re not here yourself for due diligence) $200- $800 usually, depending on size of property

Survey – not required to have, but it may be useful to know exactly where you’re lot loans are (may be required for some rehabs) around $800 or less 

Title insurance – generally around $1K, but again depends on property value and if it’s transferable like I already mentioned

Title search – you’ll want this to make sure you’re getting a clear title and it’s going to run $100- $250

Attorney fees – won’t be required here in Indy, but keep in mind these rates if you choose to use one

Escrow fees – this depends on which escrow company you use, but I’m going to include images of a mock sale here in Indy to show you an example of a company for Indiana

Marion county recorder fee – $35.00 Sales Disclosure and Deed must first be stamped by the County Assessor’s Office (City-County Building Room 1360) Please be prepared to pay the transfer fee and the sales disclosure fee.

The Assessor’s office accepts cash, checks made out for the exact amount due, and credit cards. Please be aware there is a small additional fee when using a credit card.

ATTENTION Due to a recent change to the law IC 36-2-9-18 the Endorsement fee is changing from $5 to $10 per parcel effective July 1st, 2019.

On these next two screens you’ll see the screenshots taken for a mock sale here in Indy with the current tax rate included and $5k down for a $70K property.

You can see your closing costs would be just about 1% of the purchase price, up to 3% when you factor in inspection, survey, insurance, etc.

So to recap;
I’ve given you the basic outline of closing costs for a cash purchase
Covered what you will and won’t need here in Indy
And an example of what your escrow fees here in Indy could look like

And remember to…

Make the Universe Smile.  = )

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Thanks so much!  = )

Make the Universe Smile.

~ Indy Anna
Love (at) BigReia.com
(YES that's my actual Direct Line and I really do answer lol, so please text me first Thx!)

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