Flip Your Own House
House flipping has become popular over the past few years. And rightfully so! If you can find a good fixer-upper, do a few upgrades, and then sell it for a nice return - why not?
But with just about everything, there are headaches involved. There's the stress of bidding against cash buyers, getting approved from a bank, feeling rushed to flip the house as fast as possible so the interest on the loan doesn’t kill your profits, plus considering what you'll need to pay for capital gains.
So instead, how about flipping your own house? If you live in it for 2 out of the last 5 years, you don’t have to pay capital gains on your profit so you don’t have to feel rushed to sell fast or be cash rich to pull it off.
In the first 10 years of me and my wife's relationship, we moved 4 different times! (Bonus: moving helps cut down on clutter, which is awesome!) I thought she was going to wring my neck a couple times since within a month after two of our moves, we had a baby. I kind of messed up the nesting thing a little. My bad! But it changed our financial situation forever.
The object is always to buy low and sell high, so remember - it doesn’t have to always be a fixer upper.
Our first investment was buying a brand-new house with an unfinished basement. We finished the basement and sold it shortly after 2 years to avoid capital gains tax and moved into a rental while we searched for our next project.
Our second house ended up with us buying land and having a new custom house built to our liking. We went with this option not because that's what we wanted to do, but because we kept getting outbid on existing houses and didn’t want to overpay.
So we found a bank that does owner-build loans, bought some land, and went to town on building it. After two years, the equity in the house was too great to pass up so we sold and bought two fixer uppers. (Yes, two!) Our cash in hand allowed us to fully remodel one of them and build a nice shop. And our monthly payment is less then most people pay for a one-bedroom apartment. The other one was a smaller home we cleaned up and turned into a rental for a year, then sold for a nice profit.
This is just a couple of examples of how you can flip your own house. There are always a lot of different options and scenarios to consider. You can find a real fixer upper and live in a camper onsite while you fix it up. It really is surprising how little someone needs to live and how much fun the adventure can be if you let it!
The house we live in now had broken down, pink cabinets, 30+ year old carpet, popcorn ceilings and a completely unfinished basement that the old owner used to grow marijuana in. Yep. We had two bedrooms upstairs and one bathroom with a run-down kitchen to start. There was no deck - only a 6ft drop off out the back door! It was a blast. Our 2 boys (who were 2 and 3 when we moved in) got to share a room for a year (which was crazy, and that's an understatement!) and we lived cozy. But we made it work and we're so glad we did.
If this is something you want to do, my advice is to focus on spending your money on what will generate the greatest return. Get with a realtor and find out what is adding value and curb appeal in your area and focus on those items. If your priority is profit, sometimes what you want in a home in comparison to what is adding value in homes are two different things - so always keep the end goal in mind!
Be sure to reinvest those funds in something that will create a return and you can’t go wrong. Good luck house flipping your own house, take lots of photos, and enjoy the ride!
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