Tax Sale Purchase... Sell or Hold? Capital gain! Waco, Texas

[Andrew Bourgeois]

Hi everyone, 

I just landed my first investment! Waco,TX

This week, I bought a property at a county tax sale with estimated cap gains of 100k if I resale the property now. Here are the details of the property:

5 ac w/SF (1/1) home (in rough shape), 2000 sqft barn, and tons of horse implements... (Note: the house might be best if demolished?)

Purchase Price: 81K (all cash)

Resale As-Is: 180-200k (according to comps)

I'm unsure of what to do with the property now. I need to make this decision while keeping my REI goals in focus. What are your thoughts?

Here are my current considerations:

1. 1. Resale the property today... If I sell it now, I'm paying ST capital gains rates which is at my ordinary income rate of 22% (approx. 20K). The advantage of this is that I close my first deal and I take my increased capital and I can move onto the next deal or two or three.
2. 2. BRRRR... repair the SF home, get it rented and refinance. Then, I take my capital from the equity and move onto the next deal. Biggest question mark here is, the home could very possibly not be worth repairing.
3. 3. Fix, Rent and hold for 12 months, then sell to get lower LT cap gain rates... 
4. 4. Sell through owner financing as is today...
5. 5. Demo the SF home, build or move a M/H and make the property our personal residence for me and my family... Here's what I'm thinking here...
   1. Our current home has lots of appreciation in it and it would be nice to lock-in those gains. I'm not interested in renting my current home as I don't want the ongoing maintenance on it.
   2. We can move a used M/H on the property for 30-40k, live on the property for a few years, and sell in a few years and pay no tax on the gains. 
   3. We did want acreage, although it's not our ideal location
      1. Advantages - enjoy the acreage, lock in the gains on our current home, let our income grow over the next few years and purchase a "dream" property in a more desirable location.
         1. I also believe this would increase our gains significantly
      2. Disadvantages - maintaining acreage, cost of moving and getting a new home built or M/H setup, and having to move in a few more years. The moving part isn't a huge deal, but I have a wife and 4 small kids. It's harder on them than myself!

I look forward to hearing your thoughts!!! Below are my goals, I thought it might be helpful to include these for you to keep me in check!

My 2022 REI goals:

1. 1. Flip 1 -3 SF homes in 2022
2. 2. Purchase 5 rental properties in 2022
3. 3. Grow my capital by 100% in 2022 (Currently have 100k for investing... minus the 81k just used for this purchase)

My LT REI goals are not as defined. I know I want to grow my portfolio to replace my wife's earnings, so she doesn't have to work. Also, I want to build generational wealth and create opportunities for the disadvantaged in our community.

I'm very new at this REI journey, but after years of living in the spectator seat, I'm jumping in head-first.

Thanks in advance BP community!