What do you do with profits from home sale?

Question

I own a Single Family Home in Fort Worth, TX and plan on selling it in October. I will get a decent amount of money out of it and I want to move forward with acquiring 2 properties as STRs once I complete the sale (single or multifamily). If you have experience with transitioning into this part of real estate investing, I would welcome any advice I can get about all parts of the process. Thank you in advance!

Adri Jusczak · Answer

Hi Christopher,

Is this SFH you are selling your primary home? If it's a secondary home, I make sure you are set up for a 1031 exchange and have the paperwork started for that before you list the house. This gives you a short timeframe to reinvest your gains into a bigger property and avoid capitol gains.

Christopher Schott · Answer

@Dave Foster it is my primary and I will have lived in it for 2 years come October. I want to take the profits and buy a 4-unit complex to turn into STRs.

Dave Foster · Answer

@Christopher Schott, Ditto what @Adri Jusczak siad.  If this is an investment property you'll need to do a 1031 exchange so you can use the deferred tax for more buying power.

If it is your primary residence then make sure you have lived in it for 2 out of the last 5 years before selling it.  You'll get the first $250K ($500K if married) of profit tax free.

Eliott Elias · Answer

I tell everyone to hold their property. If you have built up a good amount of equity why not cash out refit and rent it out? Make sure to avoid capital gains (for now) you work with a 1031 exchange officer before you close on this property.

Bill B. · Answer

Talk to local STR hosts. Make sue it’s legal. Make sure they are allowed to be that close together. Talk to your insurance agent about specifically STR insurance. Arrange for time off from work to find 4 condos worth of furniture, linens, digital locks, etc etc etc. Make sure you have time for a second job, especially the first few months when you’re clueless.

Jon Kelly · Answer

@Christopher Schott it sounds like you already have a plan on what to do with the profits. Can you rephrase your question on what you're seeking advice about?

It sounds like you want to get into the STR game. You may want to create a new post specifically to that. Try to connect with other STR investors, property managers, agents in your area.

Christopher Schott · Answer

@Adri Jusczak it is my primary home and I will have lived in it for 2 years come October.

What do you do with profits from home sale?

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