First Flip Idea and Question

[Colby Litzenberger]

All

I am starting to explore the idea of buying a house, living in it and flipping it a year later.  I have a friend who said he would be willing to live in a construction zone and pay a small amount of rent.  This would help with my holding costs, which are lessened even more since I would be living in the house as well.

I would self perform a large amount of work (I have residential construction experience), and would hire out anything I am not comfortable with. This scheme allows me to get into a house with less cash out of pocket and gets me started in REI.

I have a couple concerns with this scheme. One would be finding a property that has profit potential while being currently habitable, do able just going to be harder to find the right deal. My other concern and question for Bigger Pockets is the one year time frame. Is one year too far out to be predicting ARV? Should I just be amply conservative?

If anyone has ever done anything like this I would love to hear from you!

[Jon Holdman]

If you're going to do this plan on two years.  That way you can avoid taxes on the gain.

Predicting ARV is always hard. A year or two out is harder still.

Are you paying cash or getting a loan.  A challenge may be finding a house that's habitable enough to qualify for lending but needs enough work to do a fix and flip.  A "dated" house with a bad floor plan might work.

If there is significant renovation, get permits.  Savvy buyers will look for them.  Most areas let you get them yourself and do the work yourself if you're living in it.  My city does, though they then have a one year limit after the work is done before you can sell.  No idea what the penalties are if you sell quicker.