Account Closed   Yes, one can buy a house in San Diego for less than market value (use $450k as an example), pay to improve it and flip it for a profit ($535 maybe) or keep it as a rental ($2300 plus or minus).

The holding period of a separate element placed in service before the entire section 1250 property is finished starts on the first day of the month that the separate element is placed in service.The holding period for each separate improvement qualifying as a separate element starts on the day after the improvement is acquired or, for improvements constructed, reconstructed, or erected, the first day of the month that the improvement is placed in service.The holding period for each improvement not qualifying as a separate element takes the holding period of the basic property.

While I don't quite have the down payment amount saved up right now, I'm hoping to team up with my family (1 aunt and 1 uncle, they both own rentals) in some kind of joint venture deal where they bring a larger percentage of the down payment funds to the table as silent partners and I manage the logistics of the deal.

However, we are getting a good deal for Home 2 at its price and a will probably see good appreciation if the neighborhood improves.

That's part of the play you should look for in the small town or foreclosure market, properties with extensive recent improvements.  

I made zero improvements to the property. 

Here is my question: he is my BFF and we have joint accounts for everything.

@Brian SinclairI don't know if it fits this low-priced deal is a good fit butI like joint ventures with sellers where 70% of ARV is just too low, so the seller always rejects itSo on alternative is to do a joint venture with the seller, give a note with no payments for four months, now you're on title, you fix it, then resell it, and pay off their note when it resellsExample, $200,000 house, 20,000 in repairs, 70% of ARV minus repairs is 120,000 net to sellerFor the joint venture, figure 10% for resale costs or $20,000, add in $20,000 repair bill, add in $2000 in private lender interest, and a joint venture fee of $10,000 for the real estate investorThis is a better result for the seller, netting the seller $148,000

I have been seeing deals in Houston where the numbers are improving, so I would question current management.Mark

But those are full rehab numbers (new roof, new HVAC, kitchens, etc) so my % will improve with inflation in the near term as I've already absorbed the bulk of capex on those properties.