Live-in-flip or maximize savings rate. Looking for direction

6 Replies

Hey everyone, looking for some direction on whether to proceed with a live-in flip.

I own my primary residence and have 2 separate rental units. Between my W2 income, rental income, and keeping expenses low, I have a pretty good savings rate (30% or so). I’d normally use these savings for the next rental property.

I recently came across what would be a good live-in-flip right in my town. So I’d rent out my current primary residence, move into the live-in-flip, and then return to my current primary residence in 2-3 years, after completing the live-in-flip.

I would need to stretch my expenses to carry and repair the live-in-flip. So is it worth sacrificing my current savings rate for a larger gain through the live-in-flip in a few years? My gain through the live-in-flip would likely 3x what I would have saved.

Let me know what you think!

@Joe A. the live in flip is not guaranteed and if you've never done this before I wouldn't advise going all in on that strategy. If it is such a good flip you'll have competition from other investors and when all is said and done it will be a mediocre flip. I don't know what the numbers are but if MA is anything like CA as far as returns go because of the price point you'd be lucky to get 10% of the ARV as profit.

Thanks @Aaron K.  

I'm thinking this house may be a bit of a "in betweener". Not enough there for pro flippers, yet still scaring retail buyers off. I'm thinking that I could maybe get it for 25% below ARV. Mostly cosmetic stuff that I can do myself. Maybe I'm trying to convince myself.

If the numbers work and you want to do a live-in flip, go for it. I'm currently doing that (though it's looking more like 3.5 years... life happens). I rent out 3 bedrooms in the house as well, so my holding/living costs are zero (actually, they're negative because I bring in more in rental income than my monthly payment/utilities). Comps show I can sell for ~110k more than I bought for - some of that is due to appreciation, yes, but not much. I will have spent ~45k on renovations, but some of that is first-time flipper education cost ;)

Good call with renting the other bedrooms @Nicole Marshall to minimize carrying costs. I’m not in a position to do that because all the bedrooms will be filled up with my little ones. The more I look at this I am not finding enough margin. I could save about 70% of my expected flip gains in the same 3 year period. I would have to take my savings rate way down to carry and rehab. So the effort/risk doesn’t appear to be worth it for me. I’m thinking my best bet is adding another rental and keep maximizing savings rate.