So I am in the process of finishing up a rehab i have been working on for several months now. I wanted to do a BRRRR strategy but have been thinking maybe its not to smart for me to holding on to property without cash reserves. Other than that i would love to keep this house in my portfolio. The only problem is if a flip it, i'll be subject to short term capital gains. Can I BRRRR first and then after the year passes sell it that way i only pay long term capital gains ??
Any advice is appreciated
The difference between short and long term capital gains may not be worth it. If you can sell the house now and make a profit then the annualized return will be much better than holding the deal for over a year.
Also - getting a loan is going to cost you money in closing and fees. Put that into account when you're underwriting your deal
@Maugno M. have you thought about doing a Home Equity Line of Credit instead of selling or refinancing? No closing costs, generally just an appraisal and other small fees but can save you thousands. Plus you can use it on an as needed basis. From what I’ve read you’ll the minimum line is $25k and a 90% loan to value.
@Matt Paul I have thought about doing that. The bank told me that was one of my options. The problem i see with that is the interest rate. wouldn't an interest rate for the LOC be much higher than for a mortgage ?
I’m not 100% but usually close to current mortgage rates plus a percentage point or 2.