Enjoy Your Investment – The Live-In Flip Concept

Enjoy Your Investment – The Live-In Flip Concept

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If you’ve wanted to get into real estate investment, the first steps can be daunting. Flipping a home may sound like a great place to start, but paying the mortgage throughout the entire flipping process can be a challenge.

What if you could cut your expenses while working on your flip?

The live-in flip concept allows you to do just that. You live in the property while you renovate. Experts suggest that this is a great way for young and new investors to get started in real estate because you save money on additional mortgage or rent.

The basic method is the same as any fix and flip–you purchase an undervalued home in need of renovation, complete the needed repairs, add some desirable upgrades and resell for a profit.

We have put together a bit of information on this process. Learn more about the benefits (and a few drawbacks) and explore a few tips for getting started with the live-in flip.

live in flip paint house

Why is the Live-In Flip Such a Great Idea?

  • Tax Benefits – Paying capital gains taxes can put a damper on your investment dreams. With a live-in flip, you can avoid these taxes. The “2 out of 5” rule works in your favor. As long as you have owned and lived in a home for at least two of the last five years, you can avoid paying capital gains.
  • No Second Mortgage – Since you live in the home you are flipping, you do not have to pay a separate mortgage or rent.
  • Do It Yourself – With this process, you plan on a little slower flip (so you can take advantage of the tax benefits), so you can take on more jobs yourself. Not only will this save you money, but it will help you grow your skills.
  • Owner-Occupied Financing – With investment properties, you may have to put down at least 20%. However, an owner occupant can take advantage of more favorable financing terms with as little as 3.5 percent down.
  • Multiple Exit Strategies – You may decide to sell the house, of course. But, there are other options too–such as renting it or refinancing and keeping it.

Drawbacks to the Live-In Flip Concept

  • Moving – To take advantage of the benefits, you may find yourself moving every two to three years. This can be a bit much for many people.
  • Always Under Construction – Your home will, at times, feel like a construction zone. It can be especially challenging if you have children or pets.
  • Lack of Free Time – Your free time will almost always go towards fixing your home. Traveling and other hobbies often take a backseat to construction.
  • Risk – Any investment has risk. If you’ve put your heart and soul into a home for two years, a poor return can be heartbreaking.
  • Non-Scalable – This is one investment that can’t be scaled as you can only sell one house every two years without facing tax consequences.

live in flip fix floors

How to Succeed with a Live-In Flip

  • Keep Your Home Livable – Try to work on just one or two rooms at a time to reduce the stress of renovation. Also, clean as you go so the mess doesn’t overwhelm you.
  • Use All Your Resources – Utilize local classes, YouTube and advice from friends and others in the business to learn how to do as much on your own as possible.
  • Some Jobs Require a Professional – However, some jobs do require professional help. You may waste time and money by trying to complete these tasks alone. Learn when to hire out and do it.
  • Stay Focused on Results – Most importantly, don’t let the small tasks let you lose sight of your ultimate goal. Be creative, have fun and think about the big picture.

As you can see, there are many benefits of a live-in flip versus a regular flip–especially if you are just getting started in real estate investing. The key to success in any form of real estate investing is finding the right property. If you’d like to talk to an expert who can assist you with finding the ideal investment property for a live-in flipcontact New Western Acquisitions and speak with an agent today.

 

 

The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only.

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