The live-in flip strategy is to do some remodeling as you go on living in the property. This is a beginner-friendly way to get a feel of the market before jumping in and investing a lot of cash. Here are some of the ways you can execute the strategy to great effect.
Planning Ahead is the Best Way to Execute Your Live-In Flipping Strategy
How do you live through the mess and still stay on your game when you want to turn your house into a good deal? By preparing in advance.
First off, it’s essential to organize yourself if you hope to succeed. To do this, keep your home clean and tidy and get yourself a nice place to work. This workspace has to be organized throughout your live-in, to minimize the amount of chaos you create when renovating your home. There are a couple of things you need to keep in mind about this. The main objective is to plan and ensure you know what you are going to do next. In this way, with predefined steps in your workflow, you will not waste any time worrying about what comes next, but rather focus on getting things done one at a time. This will save you both time and cause less anxiety in the long run.
Furthermore, you should remember that there are several tasks you will not be able to finish on time despite what you estimate.
Live-In Flipping Reduces Financial Risks
From a financial standpoint, you are prone to less risk if you opt for a live-in flip.
- You will only be paying a single set of mortgages or holding costs as opposed to what you would be paying if you weren’t living in the property itself.
- There is no time limit within which you will have to get rid of the property. That is, the holding cost of the property is your actual living costs, so you will not be losing money. Furthermore, since the tax write-offs state you must live in the property for two years, you have plenty of time to renovate the place and secure a good deal.
- Even if you do not get a good deal, you are still set with a great home as you’ll be needing a place to live.
There are some drawbacks to a live-in flip though. First off, it’s not a scalable business model. While you will be able to get by paying zero taxes, but you will only be allowed to sell a property once every two years. However, if you are okay with paying taxes on live-in flips, the package as a whole isn’t as great and you are better off with other strategies that will net you more income.
The main strategy of executing a good live-in flip is to ensure that you maintain two conditions.
- You have to live in the home. The property must be legally recognized as your estate to qualify for tax breaks.
- You must own the home for two years within the past five years.
With these in mind, in addition to the tax breaks, you are looking at a lot of money in capital gains with reduced financial risks and a great way to get a feel of the market before investing more.0