All Forum Posts by: James Robert

Quote from @Bill B.:

Obviously you’d never sell until you’ve lived there 2 years, that’s a 5 figure mistake. 

Renting for a year would probably also be a five figure mistake. Unless rates are finally cut and prices rice, then maybe it’s a six figure mistake. 

If you really can’t afford the payments and don’t want to house hack you can wait until you’ve been there two years and sell. I wouldn’t recommend it, but I would never want the stress of an uncomfortable mortgage payment. Good luck. 

 Thank you for your response. Our views may be a bit different. The market could change next year nobody knows. A house by me just went for 75k over ask. I am in a low tax bracket as I take alot of write offs. I just don't know if its worth the risk of waiting for the 2 year mark. When a good comp sells, its usually time to make the move. As a Realtor thats what i see. Mortgage is 2,850. I can rent for 1,200. I am totally fine with decreasing my lifestyle and being heavy liquid. The money I would make eliminating hard money lenders out weighs my capital gains 

I bought a house for 325k last year, a comp renovated 10 doors down is up for 540,000. 3/2 same as mine, 300 square foot bigger. Do i fix this up with 20-30k and cash in my chips and look for a new opportunity. Its my primary. This mortgage is too much for me anyway and i feel i could use this money to eliminate hard money lenders in my flip business. Do I do it? I am not a buy and hold guy simple as that. I am a flipper as my job i have done 5 flips now and am a full time real estate investor. If I sold this I would just buy my deals in cheaper areas for cash. I plan to rent for a year if I do sell this. I am also a licensed Realtor so I would not pay to list. What would you do? I will have about 50k liquid after selling my current flip without selling my primary. 

Quote from @David M.:

@James Robert

So basically, its just betting whether the property will appreciate more or less than what you can do/invest with the cash proceeds?

(yes, its your primary so you can't 1031...)

The $170k pretax (I'm just using your numbers here).. is the same post tax because of the sec121 exclusion...  You've got another ~$80k to go until you max that out since you are single.

So, I guess what is the effective opportunity cost for your $300k?  not sure what are you investment intentions or assset classes (e.g. I invest in other classes than real estate).

Having 300 would allow me to delete hard money lenders from my flipping business. My profits per deal would become larger versus what my house would gain in value not selling it

Quote from @David M.:

@Theresa Harris Oh do the sort of live in flip?  In the US, he'd have to stay for at least 2 years to get the capital gains tax exclusion.  Yes, very common in the early 2000's.

After 1 year it’s 15%. In June I will be at the one year mark 

Quote from @Theresa Harris:

I don't know the answer to this, but if you did move into one of your flips and made it your primary, how would capital gains tax work when you sold? 

In June I’m at the 1 year mark. This means I only pay 15% tax rather than full capital gain. I wouldn’t make my flip my primary, I’d just live in my flip house until I found a new primary to buy or rent something 

Quote from @Jason Wray:

One way to avoid that Tax is to put it back into another property with a 1031 Exchange.  You can still take some cash to replenish your capital but the cash injection into another property avoids the hit.  Then in 6-12 months do a cash out refinance and take out cash "Tax free".  

I don’t think 1031 exchange on a primary is legal

I’m a single man, finding somewhere to live is of no concern for me. I have so many options, rent a place for a few months until I find a new primary, stay with friends or parents for a bit, hell I could even live in one of my flips since that’s my main source of cash and always have one going on. I’ve sold my primary before and rented for 4 months and boosted my bank account significantly. I’m still on the fence about selling it but based on my experience sometimes it’s good to sell right after a record breaking comp in your neighborhood sells. Still on the fence about all this but sure is enticing to take the money 

I currently have a house 3 bed 2 bath in one of the best neighborhoods in Cincinnati. I paid 325k for it with 5% down in June 2023. Comps for this house fixed up are now trading in the 5's.. My mortgage is 2.8k and it would rent for 2.8-3k a month on LTR. I don't want to deal with Air Bnb either. Property manager said it would gross around 5k on average but after paying their fee and cleaners and my utilities its the same as LTR. I flip houses as my main job now but am also a licensed realtor. I save 3% when I list my properties myself but this is my primary. If I put 20-25k into this house and sell it for 525 I would walk with around 170k pre tax.  That would have me sitting at around $300,000. I turn 27 in May. Its tempting to just sell it while my market is hot and see what I can turn that $300,000 into. 
Please comment your thoughts. 

Quote from @Jake Baker:

@James Robert

Timing is everything for us. I will ask my contractor for a completion date when he bids me. If he says 8-10 weeks. I will hold him to 10 weeks and constantly remind him of our list date so we can make our desired profit. 

It is key to have this conversation the very beginning. Any extra month of rehab means extra holding costs and opportunity cost because we can't move on to the next deal. For me, I care more about the accuracy of costs and finishing on time than the actual cost of the reach.

If you really like this contractor, offer a bonus structure if he finishes on time. 

 I like this idea. I might tell him if he gets it done by completion date of march 15th ill give him an extra 1.5k 

Quote from @John Morgan:

They all do. lol. And I pay my guys well. But they’d rather go do a 100k kitchen remodel than deal with a 60k full home rehab from me. It’s frustrating when they’re in the middle of project for me and someone offers them a ton to do work somewhere else. They go where the money is, but eventually get back to me. This is why I hate rehabs.

Yeah its frustrating. Holding costs are alot on hard money loans. I almost want to just hire workers full time at an hourly rate and have in the contract they cannot take other jobs until mine is done.