Rental Property Investor · Washington Township, NJ · Member since 2015 · 1k+ posts · 976 votes
8y
@Anthony Bright - The answer provided by @Harjeet Bhatti is only partially correct. There is a delayed financing exemption if you purchased in your personal name and are looking for a Fannie/Freddie lender. If you purchased under an LLC and/or are refinancing with a portfolio lender, than you probably don't need to wait to cash out, although you will more than likely need a tenant in place.
The bigger question here is what are your goals? Flipping will put more money in your pocket faster, but it's only for the short term you need to keep flipping to keep the cash coming in. With flipping you also pay higher taxes since it's considered active income and with rental property you get a much smaller pay day, but you also pay little to no tax on the gains since it's passive and therefore have a number of tax advantages you can take.
There isn't really a right or wrong answer here...just the answer that makes most sense for you and your situation.
Lender · Glenview IL- CDLP NMLS#230554 · Member since 2015 · 2k+ posts · 747 votes
8y
@Anthony Bright
If you are trying to sell lender won’t lend on short term basis although you have other option open to take out loan. If you want to rent this property you can cash out if there is no loan on the property under delayed financing exception. Otherwise you have to wait 6 month to cash out.
Rental Property Investor · Washington Township, NJ · Member since 2015 · 1k+ posts · 976 votes
8y
@Anthony Bright - The answer provided by @Harjeet Bhatti is only partially correct. There is a delayed financing exemption if you purchased in your personal name and are looking for a Fannie/Freddie lender. If you purchased under an LLC and/or are refinancing with a portfolio lender, than you probably don't need to wait to cash out, although you will more than likely need a tenant in place.
The bigger question here is what are your goals? Flipping will put more money in your pocket faster, but it's only for the short term you need to keep flipping to keep the cash coming in. With flipping you also pay higher taxes since it's considered active income and with rental property you get a much smaller pay day, but you also pay little to no tax on the gains since it's passive and therefore have a number of tax advantages you can take.
There isn't really a right or wrong answer here...just the answer that makes most sense for you and your situation.
Rental Property Investor · Marina del Rey, CA · Member since 2016 · 17 posts · 7 votes
8y
@Anthony Bright - I concur with @James Masotti. The right answer depends on your goals and, from a strictly financial perspective, the route that results in the highest NPV for you. Due to the tax consequences James mentioned (and so long as you're only doing so infrequently), it typically makes the most sense to hold for at least a year to at least hit the capital gains tax qualification. Assuming this is one of your first potential flips, the IRS wouldn't consider the flip to be part of a trade or business yet (recharacterizing the asset from an investment and changing the tax consequences).
As with any financial decision, there are many factors to consider to confidently arrive at a decision. If you're willing to provide some rough numbers in the post, there are plenty of professionals here on BP that would be happy to chime in and provide more color.
Philadelphia, PA · Member since 2018 · 24 posts · 1 vote
8y
Well basically i put 90k into a property and I’m selling it for 175k. I’ve had it for 16 months and think it will get appraised for 190-200k. Am i able to cash out refi and pull 80% equity out and keep it or should i just sell???
Philadelphia, PA · Member since 2018 · 24 posts · 1 vote
8y
Well basically i put 90k into a property and I’m selling it for 175k. I’ve had it for 16 months and think it will get appraised for 190-200k. Am i able to cash out refi and pull 80% equity out and keep it or should i just sell???