All Forum Posts by: Dale Jackson

Agree on the vessel sinks.  

I'd also add laminate flooring.  

 John,

Thanks for the reply, certainly these are valid points.  However, in my situation, I would be retired and am not really looking to eek-out every last dollar.  

It's more of a lifestyle plan... my kids and I all need a house and this would be my version of sequential "house hacking".

Also, this wouldn't preclude me from doing other flips if I had the interest.

Arlan, 

Thanks for the reply.  I should clarify that I already have a retirement plan in place through my "real" job, this would be supplemental.  

The supplemental retirement plan is to build equity for all of us by sequentially flipping properties.  

Again, I don't want to invest in rentals.

Below is an idea I’ve been kicking around. I’d appreciate any feedback...

In general my retirement plan is to sequentially buy homes on a 24 month cycle for myself, my son and his wife and and my daughter. The goal is to do this profitably and tax free.

Background:

I’ve done two profitable, owner-occupied, “slow” flips. I like the process and plan to ramp this up with 2-3 more before I retire in a 2-3 years.

My Retirement Plan:

A typical scenario would be for one of my kids to buy a house (I’d help with the down payment and renovation costs). I’d renovate it while they lived in my place. Once I’m done, they’d move in and live in it for 2 years. They would then sell it at (hopefully) a profit and be able to exclude the gain from their taxes.

In a perfect world, we’d do this sequentially so that I’d always have a project and we’d be cycling through the houses (son - daughter - my own place) so that each of us is building equity tax free.

The buying decision is theirs - they have to live there and pay the mortgage. Also, the selling decision is theirs - 2 years is the minimum to exclude the gain, but they could stay longer if they prefer. I could just go find other solo opportunities if they wanted to opt out.

My thought is, they're going to get my equity at some point. They might as well put it to use sooner rather than later ;-)

Assumptions:

• We’d live within 10-20 miles of one another.
• My kids and their spouse(s) would provide assistance to the renovation process as they are able to.

• While buying rental properties probably makes more sense, I have zero interest in being a landlord.

Thoughts??

David,

Thanks!  I'd welcome further critique.  

Best wishes.  

Lynda,

Thanks for your thoughtful reply.  Yes, those are some valid points.  In my idealized scenario, the buying decision is theirs - they have to live there and pay the mortgage.  Also, the selling decision is theirs - 2 years is the minimum to exclude the gain, but they could stay longer if they prefer.  I could just go find other solo opportunities.  

My thought is, they're going to get my equity at some point ;-).  They might as well put it to use sooner rather than later.  

Below is an idea I’ve been kicking around.  I’d appreciate any feedback...

In general my retirement plan is to sequentially buy homes on a 24 month cycle for myself, my son and his wife and and my daughter. The goal is to do this profitably and tax free.

Background

I’ve done two profitable, owner-occupied, “slow” flips. I like the process and plan to ramp this up with 2-3 more before I retire in a 2-3 years.

Round 1

• Retire from my current job.
• Relocate to be near my son & daughter.
• Son & wife buy House 1A.
• I gift them the money for the down payment and renovation.
• I move into the House 1A and complete a renovation that takes about 8 months.
• During the renovation they live in an apartment I have rented.

At the 8 month mark:

• I’ve completed the House 1A renovation.
• Son & wife move into House 1A and live there for the next 16 months.
• Daughter buys House 1B.
• I gift her the money for the down payment and renovation.
• I move into the House 1B and complete a renovation that takes about 8 months.
• During the renovation she lives in the apartment I have rented.

At the 16 month mark:

• I’ve completed the House 1B renovation.
• Son & wife are living in House 1A.
• Daughter moves into House 1B and lives there for next 16 months.
• I buy House 1C for myself.
• I move into House 1C and complete a renovation that takes about 8 months.

Round 2

At the 24 month mark:

• I’ve completed the House 1C renovation.
• Son & wife sell House 1A and with the profit buy House 2A.
• They are able to exclude the gain (profit) from the sale as they have owned the home for the last 24 months. (For IRS purposes, they have lived in House 1A for the entire 24 months).
• I move into the House 2A and complete a renovation that takes about 8 months.
• During the renovation they live in my completed House 1C.

At the Round 2, 8 month mark:

• I’ve completed the House 2A renovation.
• Son & wife move into House 2A and live there for the next 16 months.
• Daughter sells House 1B and with the profit buys House 2B.
• She is able to exclude the gain (profit) from the sale as she has owned the home for the last 24 months. (For IRS purposes, she has lived in House 1B for the entire 24 months).
• I move into the House 2B and complete a renovation that takes about 8 months.
• During the renovation she lives in my completed House 1C.

At the Round 2, 16 month mark:

• I’ve completed the House 2B renovation.
• Son & wife are living in House 2A.
• Daughter moves into House 2B and lives there for next 16 months.
• I sell House 1C and with the profit buy House 2C.
• I’m able to exclude the gain (profit) from the sale as I have owned the home for the last 24 months. (For IRS purposes, I have lived in House 1C for the entire 24 months).
• I move into House 2C and complete a renovation that takes about 8 months.

Round 3 and beyond

At the 24 month mark:

• I’ve completed the House 2C renovation.
• Son & wife sell House 2A and with the profit buy House 3A.
• The cycle as described in Round 2 continues as long as it makes sense for all parties involved.

Assumptions:

• Obviously, the schedule outlined above is greatly simplified, but provides the basic concept.
• We’d live within 10-20 miles of one another.
• My kids and their spouse(s) would provide assistance to the renovation process as they are able to.
• My daughter may be getting into real estate sales - this would help with sales commissions and finding new properties.
• While buying rental properties probably makes more sense, I just have zero interest in being a landlord.

Pros:

• My kids would always be living in a completed renovation.
• Each party can elect to either roll the (assumed) profit into (a) a nicer/more expensive home or (b) use the equity gain to make a larger down payment and have a lower mortgage.
• They can opt out at anytime. Perhaps they move away or just want to stay in one place. Even one round of this would help them.
• Future grandkids could stay in the same schools / neighborhoods as we’d be reasonably close to one another.

Cons:

• I get to live in a continual construction zone! (I can deal with this - I live alone and plan to keep it that way).