Capital gains are calculated as:Sale Price - (Original Purchase Price + Capital Improvements + Selling Costs) - depreciation (if applicable) = Capital GainYour mortgage or HELOC balance does not affect this calculation—it only determines how much cash you take home after the sale.In Massachusetts, if the home was your primary residence for at least 2 out of the last 5 years, you may qualify for the Section 121 Exclusion, allowing you to exclude up to $250,000 (single) or $500,000 (married filing jointly) of the gain from federal capital gains tax.

I’d recommend starting with rental arbitrage to get your feet wet and generate some positive cash flow.While I haven’t personally done rental arbitrage, some of my employees have, and they found it to be profitable.However, as a long-term strategy, you’re essentially building your castle on someone else’s land.

Many groups buy cash flow negative deals and overraise to pay distributions right away. 

Let’s break it down.Self-Managing Your Chicago House HackPros of Self-Managing✅ More Cash Flow – Property managers typically charge 8-12% of monthly rent.

Do you have cash reserves for capital expenses and improvements? 

We have excellent credit and cash capital.

Monthly payment is 1900 with a 6.5 rate and would rent for 2500.posted in another group but realized it was the wrong one Hey Keith, I've helped other clients do this sort of thing - vacating a primary residence and then pull out cash to purchase another property elsewhere.

Imagine making millions of dollars over the course of your career and then having to pay 30-50% every year to uncle sam instead of compounding that cash over time.This is exactly what real estate professionals have learned to mitigate.To reduce their taxable income, they just buy a building every year, do a cost seg, and use depreciation to reduce their tax liability dramatically.Their personal wealth snowball grows much larger and much faster than their W2 counterparts who give most of their money back to the government each year.Following this strategy as a real estate professional is one of best ways to end up with a much larger net worth at the end of your career.

Cash How did you add value to the deal?

Our portfolio currently cash flows, but cash flow isn’t our top priority right now since we plan to use this portfolio to supplement our retirement in 12 years when I leave the Army.My biggest challenge is committing to an out-of-state market.