Flipping houses are one of the most attractive trading tactics for people looking to invest in real estate then sell for a big return. However, what many people don’t know is that investing in a flip can get really expensive and there just might be a better way.
First, you will need at least 20% for a down payment, money for closing cost, and you need to have access to cash or credit in order to take care of repairs and upgrades. Furthermore, you need to make sure you have carrying cost sat aside because you’re going to have a mortgage payment due every month until you sell the home.
However, another way to flip a house is to move into your flip! By making your flip your primary residence it gives you the ability to take advantage of many of the other different types of loan options that are available to regular homeowners that you can’t get when you’re operating solely as an investor. This means you don’t have to put as much money down and your expenses won’t be as high because you live there.
But this also means you’ll be living in a project. You may not be as stressed about moving things along as quickly because you’re living in it, but it’s not necessarily the most comfortable of circumstances either. This of course is assuming you’re not dealing with a major rehab in which case you would definitely need to go the traditional route.
Now, if you want to take advantage of not having to pay capital gains tax you would have to wait at least two years before selling or do a 1031 exchange where you’re rolling the profits from your sale over to the next home. Be sure to get an accountant involved if you’re going to decide to sell it under that two year period.
Either way, you can make a ton of money flipping houses but if you don’t have the kind of capital to play “Flip This House” then the next best thing is to make it your primary residence and start from there.