Buy & Live In First Flip

[Chris Frydenlund]

My wife and I want to get into flipping houses. We are thinking about buying a fixer upper that we can stay in while we remodel it.

We live in Houston, TX/Galveston, TX area and have 15K in cash, so we'll need a loan to finance the property.

We have absolutely no construction experience and have never lived in a house, only rented apartments.

Our Goal

Make an overall profit. Instead of continuing to rent a $1,100 apartment (2 bed) over the next 1-2 years, we could stay in a cheap house. Also instead of paying for rent and temporary mortgages when flipping houses we could stick to one payment. And last to minimize the risk of flipping we would have the opportunity to take the time to do as much as we can ourselves (because of no deadline), buy used/salvaged materials, and stay in the house until we get an acceptable offer.

Questions

1. What's the best way to finance it?

2. Is this a smart way to get into flipping houses?

Any tips and/or suggests would be appreciated

[Suzanne Griffiths]

Chris Frydenlund I would suggest you look at a conventional mortgage, like an FHA loan or one that will give you a low interest rate. Then make sure you know how long you would need to own/live in it to avoid the capital gains taxes when you do sell. I believe it is after two years, but consult your accountant.

The reason I suggest it is with little or no construction experience it will take you longer than you think it should. Plus living in the home tasks generally take longer than if it were vacant.

Also, make sure you are prepared to have your home be your job 100% of the time. Giving yourself a longer timeframe will take a little of the stress and pressure off and allow you to make the upgrades with quality. You really want to avoid having things look like "a homeowner special", never helps the resale.