Live in Flip

Member since 2022 · 6 posts · 5 votes

Hello all,

I am looking into purchasing my first property. I plan on purchasing a single family with a conventional loan and living in it for 1-2 years. While there, I will renovate, mostly cosmetic, and then most likely flip. Depending on the market at the end of the 1-2 years, I could rent it out instead.

I am looking for any advice or anyone who can hop on a call and discuss in more detail the things I need to consider, as well as briefly give me tips on how to actually analyze a deal. Since this is my first one, I don't want to take on too much renovation so I am mostly looking at cosmetic and maybe finishing an unfinished basement.

I have been struggling with the initial property analysis to determine if a deal is good. Please feel free to message me or respond to this post and I would love to connect more.

Thanks!

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Christian Leon

Lender · Miami, FL · Member since 2026 · 20 posts · 8 votes

Honestly a live-in flip is one of the better first deals if you can stand living in a reno. Big thing to know going in: if you live there 2 of the 5 years before you sell, up to $250K of the gain is tax free ($500K if married), so selling at 2 years instead of 1 can be a real difference. For the analysis keep it simple. Pull 3 to 5 sold comps of renovated houses close by to set your after repair value, then subtract the purchase, your rehab budget plus a 10 to 15% cushion, closing costs, and about 6 to 8% to sell. What's left is your margin. Then run it as a rental too, rent against the full payment with taxes and insurance, so you know the fallback actually works. Cosmetic plus a basement is a smart scope for a first one, just pull permits on the basement so it doesn't bite you when you sell.

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Christian Leon
Lender · Miami, FL · Member since 2026 · 20 posts · 8 votes
2d
Honestly a live-in flip is one of the better first deals if you can stand living in a reno. Big thing to know going in: if you live there 2 of the 5 years before you sell, up to $250K of the gain is tax free ($500K if married), so selling at 2 years instead of 1 can be a real difference. For the analysis keep it simple. Pull 3 to 5 sold comps of renovated houses close by to set your after repair value, then subtract the purchase, your rehab budget plus a 10 to 15% cushion, closing costs, and about 6 to 8% to sell. What's left is your margin. Then run it as a rental too, rent against the full payment with taxes and insurance, so you know the fallback actually works. Cosmetic plus a basement is a smart scope for a first one, just pull permits on the basement so it doesn't bite you when you sell.
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- Adam KingPro Member
  OP
  Member since 2022 · 6 posts · 5 votes
  2d
  Thank you for the reply, I will try that analysis method. Much appreciated, Christian!
  0 Reply
Caleb Brown
Real Estate Agent · Kansas City · Member since 2018 · 5k+ posts · 3k+ votes
2d
I did a live in flip. I would make sure you gather bids and not underestimate the rehab. It's a great way to start but you will be living in a construction zone and it'll take $$ to rehab as you go. You can either flip or do a live in BRRR where you move out and rent.
1 Reply
Ryan BakerBusiness Member
Lender · Strongsville / Cleveland, OH · Member since 2026 · 176 posts · 46 votes
2d
Adam, live-in flips are a solid first move. A few things I'd look at.
Plan on staying 2 years if you can. If you live there 2 of the 5 years before you sell, most of the gain can be tax free (up to $250k single, $500k married). Sell at 12 months and it's taxed, so that alone can change which exit makes sense.
On the basement, check ceiling height and egress before you buy. A finished basement with a legal bedroom adds a lot more value than just finished square footage, and you want it permitted so it counts at appraisal and resale.
You also don't have to pay for all the work out of pocket. Some conventional loans let you roll renovation costs into the purchase, which keeps more cash on hand for surprises.
Run it both ways before you make an offer: what it sells for after the work, and what it rents for against the full payment. If both work, you've got a good deal.
Happy to go over financing on a property you're looking at. Give me a call, my number's in my signature below.
– Ryan
[email protected]330-548-4430
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Jules Aton
MD/DC · Member since 2024 · 1k+ posts · 1k+ votes
2d
I did them in the beginning and agree it’s a great way to get started. It will be dirtier than you can imagine and will also probably take longer but worth it in the end.
0 Reply
BJ Everson
Realtor · Columbus, Franklin County · Member since 2026 · 171 posts · 67 votes
2d
- @adamk398 Adam, a live-in flip is a good first deal. For analysis, I'd run every property three ways before offering:
- As your home: can you comfortably carry the full payment (principal, interest, taxes, insurance, PMI) on your own income?
- As a rental: rent from signed-lease comps, minus taxes, insurance, vacancy, repairs and capex. This is your fallback if the sale market softens.
- As a flip: ARV from sold comps of renovated houses, minus purchase, rehab, holding costs and selling costs (commissions, closing costs, transfer tax). On timing, the IRS home-sale exclusion (up to $250,000 of gain, $500,000 married filing jointly) generally needs 2 years of ownership and use out of the last 5, so the 2-year mark can matter. Confirm with a CPA. If you finish the basement, pull a permit. Unpermitted finished space can get discounted at appraisal. What market are you buying in?
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- Adam KingPro Member
  OP
  Member since 2022 · 6 posts · 5 votes
  2d
  Hey BJ, thank you for the reply. I appreciate the feedback. I am buying just outside Minneapolis, MN. Its fairly hard to find a deal for less than $300k that is not a total disaster.
  0 Reply
Adam TafelBusiness Member
Real Estate Agent · St. Paul, MN · Member since 2017 · 609 posts · 406 votes
1d
I've been investing in the Twin Cities since 2015, a full-time realtor helping investors since 2019. Feel free to shoot me a private message, and I can underwrite the deal with you.
I think it's important that you underwrite this deal as a medium- to long-term hold as well as a live and flip, as we are in a fairly precarious market at the moment. Don't listen to anyone who tells you otherwise. Every single investor and flipper I know is tightening up their numbers and getting a lot more conservative with underwriting.
We can only take so many interest rate increases before prices will start to fall, and values in certain submarkets of the Twin Cities have already fallen. Remember, a real estate correction is not like the stock market. You can't just check the ticker on your phone and see the movement.
Many of the deals which are currently pending and are currently accumulating days on market will eventually be the comps which bring the market down. We might not be seeing all the signs of a correction just yet.
To be clear, I am still buying deals and helping plenty of clients buy deals, but when it comes to flips, I would urge extreme caution.
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Kyle Jones
Chicago, Cook County · Member since 2026 · 45 posts · 19 votes
1d
The basement is where a
"cosmetic" first flip
quietly gets expensive.
Before you count it:
- Check for water first.
Stains, white crust on
the walls, musty smell.
Fix water before finish.
- Ask if the space can be
legal living area. Exits
and ceiling height rules
apply. Call the city.
- Look up what is in the
ceiling. Ducts, drains
and beams can eat height
you planned to use.
- Keep the first scope to
paint, floors, lights and
fixtures. Those you can
price with confidence.
Kyle
0 Reply
Marc MoraPro Member
Investor · Fort Lauderdale, FL · Member since 2026 · 303 posts · 47 votes
1d
@Adam King, I wouldn't mind helping. I'd only buy a house that still works as a rental, because if the market's soft when the year or two is up, renting it is your way out. I've done house hacking, and have owned property across the US, so I'm open to getting into the finer points with you. Are you doing the cosmetic work yourself? What other strategies did you weigh before landing on the live-in flip?
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- Adam KingPro Member
  OP
  Member since 2022 · 6 posts · 5 votes
  1d
  Hey Marc, thanks for the reply! I will be doing most of the cosmetic work myself. I work in construction and have a few friends who have done renovations to help. I have considered house hacking as well. The reason I landed on a live-in flip is mainly due to the price of duplexes in my area. The rent does not cover as much of the mortgage as I would like, and even if I rented out both sides of a duplex, it would be negative cash flow in many situations. Which is why I came to the idea of a live in flip. I would potentially be open to renting the property out rather than flipping and doing more of a BRRR strategy but that will depend on the market of course.
  1 Reply
- Marc MoraPro Member
  Investor · Fort Lauderdale, FL · Member since 2026 · 303 posts · 47 votes
  5h
  Got it. Shooting you a message @Adam King
  0 Reply
James JonesPro Member
Investor · Collierville, TN 38017 · Member since 2017 · 1k+ posts · 740 votes
1d
Adam, run it as a rental first and a flip second. I buy single-family in Memphis under $100,000, rehab for around $40,000, and refinance at 70 to 80% LTV on DSCR off an ARV of $180,000 to $265,000, with Section 8 rent of $1,395 to $1,950 for a 3-bedroom. That rent has to cover vacancy, repairs, CapEx, property management, taxes, insurance, and the loan payment, and pass the 1% rule, or I pass. At $300,000 outside Minneapolis, the rent has to be around $3,000 a month to pass that same test, and most houses do not get there. If the house works as a rental after the rehab, the flip is a bonus. If it only works as a flip, I would not buy it to live in and hope the market bails me out.
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Evan Hutcheson
Member since 2026 · 2 posts · 0 votes
18h
The tax treatment is the piece I would get clear on before you buy, because it can change the profit as much as the rehab budget does.
If you honestly live in the house as your main home, and you meet the two-out-of-five-year ownership and use tests, Section 121 can exclude a large amount of gain when you sell. That is the main reason a live-in project can look so much better than a straight flip. If the pattern looks more like a business of buying, fixing, and selling, the IRS can treat the profit as ordinary income instead, and that exclusion may not be there the way people hope.
A first house, a one-to-two-year stay, and mostly cosmetic work is typically a stronger “this is my home” fact pattern than repeating the same play every year. I would still be careful about how you talk about it, how quickly you list it, and whether you are already planning the next one.
A few practical points:
1) So if you clear $80,000 after selling costs, the net in your pocket is very different if that is excluded primary-residence gain versus ordinary flip income. Build tax into the deal analysis, not just after-repair value minus rehab.
2) A conventional loan will have occupancy rules. Live there for real.
3) If you might rent it instead, that is a different path. You can depreciate it as a rental, but later use of the 121 exclusion gets more complicated, especially if you took depreciation.
On the deal itself, keep the first one simple, just like you said. Price in holding costs, closing costs on the way in and out, and a cushion for the basement if you are not sure you will finish it.
Happy to keep talking through the tax side here if that is useful. Hope this helps.
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