What is a Live-In Flip?
Many people starting out with homeownership see opportunity. Say you have a downpayment, which is good enough to get you into certain areas you like, but maybe you want to save some more, and get an education along the way. Enter the Live-In Flip. While flipping houses isn't technically investing, you can still use flipping as a way to start making some money!
Live-in flipping sounds exactly how it means, you are acquiring a house, doing all of the necessary renovations, and living there the entire time! This can sound daunting at first, cause, who really wants to live in a construction zone for a long period of time? Let's consider the upsides:
1) Taxes: as long as this house is your primary residence for at least two years, you will pay no capital gains tax up to $250k filling individually, $500k filing jointly, thanks to the Taxpayer Relief Act of 1997
2) Timing: often flippers are paying holding costs, and the longer the job takes, the more interest they're paying. Here, you carry the mortgage, so feel free to work at you own pace. Might as well stay two years to get the tax breaks!
3) No Pressure: maybe you list it and it doesn't sell, or maybe you decide you're in love with the house after it's renovated, you can stay!
This strategy is certainly not for everyone, and it takes a lot of patience and focus. Some people use it as a time to tackle some of the smaller projects themselves (tiling, cabinets, etc)., while hiring out the bigger jobs. For many, this is a way to get out of renting, and on a path to homeownership.
Either way, when the renovations are done, you'll have a much better understanding of house flipping, and firsthand experience watching your design dreams come to life!
If you’re looking to learn more about how to find the right house for your goals, don’t hesitate to get in touch by following me @joesteelerealestate across all platforms. Prefer a video version of this blog? Please watch below and subscribe for more content like this!