& pay the IRS the 15% capital gains tax on the investment.

I think auctions are something you should move into after you've gained experience.

Good return & benefit of personal use as well.

I purchased my first home in Washington state (2010)  and looking to use its equity in an investment property to gain passive income for retirement.

Warren Buffett has said the Power of Compounding is one of the strongest benefits of investing.

When I write the contract out, I was planning on saying I bought it from him for $35,000 so he can avoid capital gains.

Peeps still have to live somewhere and there is still some benefit to owning a home than renting .. it could just be over building in your area as well.. you see that a lot with condo developments the lag time to get them up is so long that by the time they come to market the market cant absorb more.Not sure in Austin other than there was from what I understand a large run up.. but I can see luxury pricing in Texas being an issue with the prop tax's that are quite a bit higher than other parts of the country but that is usually mitigated for texas residence who don't pay state income tax as there is none in Texas.. so I think texas for TExans is a great investment long term. 

. - Also, remember you can do 1031( within three year of moving out)  in a way that you receive required cash and still defer other remaining gain.

The $20k figure includes the financing to buy it then to sell it again including capital gains taxes and fixing a couple small things that led to be fixed.

This is more of an accounting question and it would definitely avoid capital gains.