Updated over 10 years ago on . Most recent reply
But, rent and sell
I would like to know people's opinion on an idea I have below. I have some (but not a ton) of experience renting and selling properties and would like to know if something is flawed in my logic. Of course I would do all my due diligence on any decisions made and would like to know if there's anything materially wrong with what I'm suggesting below.
I am interested in buying a property that needs to be fixed up but is in good enough condition to rent. I would buy a house that suggests I will buy at a favorable price to rent ratio AND a favorable resale value if flipped.
My intention is to buy the house all cash and rent the house for one year. During this year of course I would being collecting cash flow. Then after a year I would fix the house up and resell it at a profit. The point of waiting a year is to avoid short term capital gains tax thus paying long term capital gains tax.
Another advantage of selling after a year is to avoid getting "stuck" with a house because housing prices go down. In the course of one year a house typically won't increase or decrease materially.
The plan would be to do this over and over again if successful. This would also be side income for me as this would not be my day job. Besides all the typical rental and flip risks that I'm well aware of are there any major downsides I'm not thinking of?