Where do you live during a flip?

Question

Hey guys! I’m just wondering what your process is when flipping your first home. For example if my first home is a fix and flip where do you stay in the meantime? Or if your first home is a rental condo/ rental duplex where do you stay if you want to rent out both duplexes? What has worked for you?

Thanks!

Joe Villeneuve · Answer

Living in a home during any type of construction is guaranteed to double (I've seen even longer) the time...and thus the cost, of any rehab.

Brian Ellis · Answer

as @Joe Villeneuve mentioned, living in your flip will definitely be double the amount of time. Especially if youve never done it before. When I did it, i did everything backwards. The only upside is i have A LOT of equity in the house now and a sh*tload of knowledge. Living in dust 24/7 is no fun, but was well worth it.

I gained so much knowledge from a live-in flip. I learned how to better utilize my time, save money, live frugal and be ok with less. I learned what parts of the house to rehab first, what to sub-out, what i could and couldnt handle. I learned how to: Install hardwood flooring, tile, crown moulding, window and door trim, baseboard, plastering, electrical, plumbing, hvac, you name it.

If you go that route, my only advice is to make youtube your best friend, and get ready for a lot of blood sweat and tears. Within the first couple days of rehabbing my live-in flip, I had a nail go through my foot, and almost knocked myself out cold pulling off a door jam.

Then When i bought a duplex, it all seemed so easy!

Joe Villeneuve · Answer

Single, married, kids, ...doesn't matter.

Tim Johnson · Answer

Bless you hearts, all my flips my wife made us rent a house or have double payments.  Happy wife happy life.   We have rented houses, owned multiple houses the whole thing

I'm also a GC and do it every day so I know how it can go from zero to hero in a second

Russell Holmes · Answer

@Jessica Devlin typically with a fix and flip home, it is bought purely as an investment.  In other words, the buyer never plans to move in.  For example, I just closed on a small 3 bedroom home with a client.  His GC has given him a $38k rehab estimate and 6-8 week timeline.  The house sits empty the whole time while work is done and then I'll list it for him when complete to sell to a buyer who will move in.  The next buyers get a fresh, never lived in home.  While the house sits empty, you do still have to pay any sort of debt service (mortgage, loan, line of credit, etc), electric, water, sewer, property taxes, insurance etc.  This is all referred to as 'holding costs' or the costs of having a house you are responsible for that doesn't bring in any income.  100% of the profit on a flip comes at the sale of the property and that is where you make up for the expenses along the way (hopefully!)  It doesn't serve to bring in income or be a place to live while being rehabbed.

However, there is one type of flipping where you do live in it, not surprisingly called a "live-in flip".  These are typically the properties that aren't awful and you can move right in, more so cosmetically dated and in need of cosmetic rehab and/or items like a roof or AC system that are easily handled by you, the owner, calling one company to come take care of it.  The items needing rehab as you live there are things like cabinets, flooring, fixtures, painting, etc.  You live in and around the work, do some of it yourself, and if you hold the property over 2 years, you can sell without paying any tax on capital gains up to $250k single or $500k married.   To get that tax benefit of zero capital gains tax (up to the limits) you have to have physically lived there for two years.  So everyone who is flipping houses in shorter timeframes of 6 months or so are paying taxes on that profit as if it were normal job income (flipping is very much like a job since its immediate payment without longterm growth).  Live in flips aren't necessarily a way to make a lot of consistent money due to the two year requirement but rather a 'side hustle' you can do to build tax-free wealth while doing other more active things.

Nick Rutkowski · Answer

@Jessica Devlin

When my girlfriend and I bought our first house, we lived in one bedroom with our dog and cat. Once we started to fix it up we were able to open our house up. Now I sleep on the couch while her, the dog, and the cat take the bed. Life is good.

Where do you live during a flip?

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