Your personal home strategy

Innovative Strategies
15yFollow

Your personal home strategy

Jon Klaus
Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes

Are you using your home for something beyond shelter and lifestyle choice? Is your home part of your real estate investing strategy?

Examples:
--You move fairly often to take advantage of the home sale tax exclusion of up to $250K/$500K.
--You live in a fixer and rehab it while you live there.
--You live in a unit of a duplex or quadplex and have your tenants pay the mortgage.
--You choose the part of the country you live in based on how you think it will do over the next few years.
--You borrow to the max at a low rate on your home, using the dollars that are freed up to buy investment properties.
--You rent for dirt cheap to free up funds for REI.

For me, it's land banking. I live on a ranch outside a big city, close to an interstate highway, hoping that land values will grow more quickly than home values. This with a realatively cheap cost of funds.

What's your personal residence strategy?

4Reply
33 views

Most Popular Reply

Jeff S.
Specialist · Portland, OR · Member since 2010 · 3k+ posts · 1k+ votes
15y

It's the only way to go if you are resource short. Bought my first duplex fixer, moved in and cleaned it up, put owner occ financing on it and did it again with another duplex, lived in it for a year and then moved in to a fixer condo-cleaned it up and stayed a few years. Then bought a condo all fixed up, tired of living and fixing, but eventually turned it into a rental too. Bought another condo, light fixer, still there. Thinking of refinancing and renting it, and getting something in the foreclosure market. You guessed it, I am single with GF

2Reply
See this reply in the discussion

13 Replies

Jump to latestLatest
  • Bryan Hancock
    Investor · Round Rock, TX · Member since 2010 · 8k+ posts · 4k+ votes
    15y
    Originally posted by Jon Klaus:
    --You borrow to the max at a low rate on your home, using the dollars that are freed up to buy investment properties.

    This one is accurate for me.

    I don't really have a strategy for my house other than to have something nice to live in. I don't think of our personal residence as an investment like I do with other projects.

    1Reply
  • Mitch Kronowit
    SFR Investor · Orange County, CA · Member since 2009 · 1k+ posts · 1k+ votes
    15y

    We live in a certain area because it's close to family. Our "strategy" is wait until we can afford to buy a bigger, newer, or nicer home and possibly use a VA loan to acquire it. We would then rent out the house we're currently living in.

    The words of our Realtor who sold us our current residence still ring in my ears, "Never sell your property unless you HAVE to."

    0Reply
  • Jake Kucheck
    Residential Real Estate Agent · Costa Mesa, CA · Member since 2008 · 1k+ posts · 380 votes
    15y

    You sell it to your kids once they are old enough through a parent-child transfer. That way they get a home they might not otherwise qualify for, and also avoid a step-up in property tax basis. I guess this is "the kid in me".

    However, it also solves your "2 out of the last 5" problem for maintaining the capital gains exclusion, if you do it right.

    1Reply
  • Jon Holdman
    Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
    15y

    No way will my wife move around to do the two of five thing. I blame that on her dad who was continuously remodeling their house when she was growing up. She had working sink faucets over her bed. No sink, just the faucets.

    To me, my house is a place to live. I want it to meet my needs and desires. So we've done some things that probably add little value but meet our needs.

    I want it paid off. Its not an asset to be leveraged. Its a place to live. Once its paid off my costs to live there are much, much less. More generally, my overall living costs are much less.

    I have a day job and I live close to my job. Moving far away isn't really an option. I also have family in this area. If push came to shove, and we really had to, I might move for another job. But our plan is to die in this house and let the kids deal with selling it. Hopefully that's a few decades away.

    We've lived in MO, TX, and CA (though some might not consider Bakersfield part of CA) and all things considered, Denver is a pretty nice place to live. Not perfect, perhaps, but no earthquakes or hurricanes. Even bad storms or tornadoes are very rare. The biggest issue is water.

    Now, I admit I miss the ocean and have been pretty tempted by some of the really cheap real estate in FL, especially in South Beach. A $200K condo, albeit small, close to the beach sounds pretty tempting some days.

    I do have a land banking strategy in the back of my mind, though. The city has a long range plan that would allow me to build 10 townhomes on my current lot and wants to turn the whole area in the a "new urban" style redevelopment.

    1Reply
  • Jeff S.
    Specialist · Portland, OR · Member since 2010 · 3k+ posts · 1k+ votes
    15y

    It's the only way to go if you are resource short. Bought my first duplex fixer, moved in and cleaned it up, put owner occ financing on it and did it again with another duplex, lived in it for a year and then moved in to a fixer condo-cleaned it up and stayed a few years. Then bought a condo all fixed up, tired of living and fixing, but eventually turned it into a rental too. Bought another condo, light fixer, still there. Thinking of refinancing and renting it, and getting something in the foreclosure market. You guessed it, I am single with GF

    2Reply
  • Account Closed
    Full-Time Investor · Charlotte, NC · Member since 2009 · 2k+ posts · 1k+ votes
    15y

    currently renting for dirt cheap, but in a great neighborhood of charlotte...everything i have goes to my business right now...however, my plan is to finally buy my own place after this crazy summer of rehabs is finally over...then take advantage of fixing up my own house and selling every 2 years tax free...seems like a great way to make tax free money...instead of fixing it up, i'll have my guys do it before i move in, since we'll slow down a bit in the autumn anyways...i don't like living in a construction zone--learned that on my first house...if you guys remember from a while back, i posted that i was renting and living in a huge master closet in a buddy's bedroom....yes, i'm super cheap, and saving that money on rent, is what got me the money to start my business!! :)

    1Reply
  • Tim G.
    Rental Property Investor · San Diego, CA · Member since 2011 · 1k+ posts · 1k+ votes
    15y

    Renting a 3/2 near the beach, I sublease two rooms and pay just over $600 a month.

    Gets me mini experience as a landlord and time to figure things out wile saving money.

    0Reply
  • Ophelia Nicholson
    Involved In Real Estate · Hyattsville , MD · Member since 2011 · 298 posts · 256 votes
    15y

    I currently live worse than my tenants. I live in the first and cheapest house I own- I bought in 2001 for 48k including taxes and insurance mortgage is right at $500 a month. But lately I feel like I should have listened to my grandmother who said why don't you pay off the house. Then I could be getting a big heloc to buy more rehabs. Personally I like keeping my expenses down to a minimum as I don't want my lifestyle to impact my investing, like your investments have to feed your lifestyle.
    My investment stratergy is I stay in the cheapest primary residence and then I buy other houses so would be close to the rent dirt cheap to free up cash.

    0Reply
  • Bill Gulley
    Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
    15y

    LOL, this just made me realize something I've never really noticed. I have made improvements to every house I have ever lived in! I have always had a construction project, even new ones.

    I was told long ago to never fall in love with any property. All properties are for sale and for the right price I'll move on. I do have one unencumbered that I might just keep, but that's not to say I would never sell.

    How can a finance type not look at any property as an asset? If you have a liability you need to look at it as an asset to balance. LOL, So, yes, all the OO homes I have owned are considered in my net worth or as an investment.

    Jon, having acreage outside Dallas is probably a really good investment! Good luck

    0Reply
  • Rob Gillespie
    Specialist · Cleveland, OH · Member since 2011 · 1k+ posts · 852 votes
    15y

    One of the only properties that I have an emotional attachment to is our primary home. I would honestly not sell it at any price. We have an estate about 55 minutes away from the city, and it is something our entire family has put so much work into building our own little world.

    Now with that said, everything else we own has a price, I would even sell some of our properties for less than what we paid, LOL!!!

    0Reply
  • Scott R.
    Real Estate Investor · Amarillo, TX · Member since 2008 · 547 posts · 214 votes
    15y

    Closed on it June of last year, last month to qualify for 1st time home buyers, although i had to fight with the government to finally get the FTHB credit, had to prove other assets were used for rentals and such. It's still being rehabed as we speak, year later. quick cosmetic flip ended up being full kitchen and bathroom guts, all new electrical, plumbing and such. Orignal plan was to sell after the 3 years due to FTHB rules, now its almost done and how we want it, might stay in it for awhile

    0Reply
  • Account Closed
    Landlord · Seattle, WA · Member since 2010 · 3k+ posts · 1k+ votes
    15y

    Currently I have a tenant in a mother-in-law unit in my home. We are getting set to remodel our home though and this will become the single most expense property that we own and will be fully paid for.

    This is my wife's dream home and when it is done I have the green light to invest wherever I please.

    0Reply
  • Mike C.
    Investor · corpus christi, TX · Member since 2010 · 9 posts · 6 votes
    15y

    live in one side of a duplex i bought and rent out the extra 4 rooms to 4 college girls.. which is cool but ready for my own place..

    i keep a close eye on my budget too, so it's nice to hear some of ya'll do too..

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free