BiggerPockets

What is the best approach to buying a primary residence while doing rehab deals?...

I'm just starting out and would like to know if there might be some major disadvantages to one approach vs. another.

Initially I was thinking to buy a low end condo in order to minimize expenses and use the additional cash flow toward doing rehab deals.

However now I'm thinking about using my primary purchase as a 6-9 month rehab in order to kill two birds with one stone....

The only drawback might be that I might end up rushing a purchase just to make it work with my time requirements as I have a lease ending in a few months.

Right now I have 30k to work with, but am debt free and should be able to add approx 30k/yr to my working capital.... I figure I could finance the first transaction via FHA, which I already have lined up with very little out of pocket and use the rest to improve the property and continue on to the next deal.

Besides the obvious drawback of actually having to move every 6 months... is there other things I'm not considering?

any advice you have would really be greatly appreciated!

You mentioned the danger and that is buying because you need a place and not because it is the right deal for you.

Make finding the best place a priority and you won't get stung. Rent if you have to but you have some time so get to work and look.

If you can handle working and living in the same environment it is financially ideal. Did it myself since this was the only way to pull it off. With owner financing and the time on your hands it is a different ball game than having expenses eat away your profit when time slips away.

Jon mentions trying to go 2 yrs and while this saves on taxes it might not be your business plan. Obtaining new financing once a year on a new purchase works well too.

Some good responses so far. I would reiterate that u should be careful not to buy because u need a place to live, rather, be in a position to buy the correct investment. Jon mentioned tax benefits to holding 2 plus years, however, flipping 4 homes in that time would outperform any tax benefits. Keeping your living expenses down is a good start, however, the extended time to rehab and costs of moving may scratch the savings when buying to live end rehab. I personally would find a very inexpensive place to live and use my funds plus borrowed funds to go after rehab opps. This would also eliminate mistakes of buying a residence/flip combo.

I've only used one HML, and their policy was that the property could not be owner-occupied.

I'm looking into this myself. It certainly favors the young investor since we are more likely to be single and willing to rough it. My issues now are what to do once the year has passed. Rent, sell etc...

Will,

What are your thoughts on this if you are looking for a way into the market and want to own a property?

I currently rent a 3/2 and have two roomies. To me the option to get an entry into the business, get a deal on a house and then do the same as I am now but having my mortgage being paid seems like a good idea.