Pros and Cons of the 'Live-In Flip' Strategy
Flipping houses is a clever way to turn low-cost homes into profitable opportunities. Many homes have fallen out of favor due to dated and poorly maintained features, but they still have "good bones". With a few renovation projects, each one could be an appealing home to rent or resell. While most people buy separate homes to flip, a few practice the wily art of "live-in flipping" in which you live in the home while you renovate it to minimize costs and maximize efficiency.
Are you tempted by the call of a live-in flip project? Still debating whether it's the right answer? We can help with a deep dive into the pros and cons of the live-in flip strategy.
Flipping, House-Hacking, and Live-In Flips
Live-in flip projects are where flipping meets house-hacking. House-hacking is when you buy a multi-residence property (from duplex to apartment building) then live in one unit while renting the rest. It's a clever way to reduce costs and stay close to your investment.
Flipping is fixing up a house to restore it's profitability. Live-in flipping is a whole additional level of commitment compared to flipping a separate house, while offering many of the advantages of house-hacking. Of course, there are a few things you might consider downsides, so it's important to make the right choice.
Pros of Living In Your Flip
Live-in flipping is a 24-7 renovation project. You live in the house you are renovating and it will become your world. For some people, that's a DIY dream come true. For others, it would be a nightmare. But there's no denying the benefits of live-in flipping when it comes to the finances.
Don't Pay for Housing
First, you don't have to pay for housing. You don't need to own a separate home or rent nearby, and you don't need to pay two sets of utilities to keep the lights on in both places.. There's no commute to and from your home and flip except the shuffle from your bed to the kitchen each morning, and that might be perfect for you.
Owner-Occupied Financing
When you buy a house to live in, you can get much better mortgage rates. You can place a down payment of less than 5% and often get a better interest rate. If you live in the flip for 2 out of 5 years before selling, you can also take advantage of primary tax discounts.
DIY All Night
For many, living inside a DIY project is living the dream. If this is you, then you may love a live-in flip. You can DIY all day and all night, as long as you only do quite project stages like painting and retiling after dark. Save the circular saw for daytime hours.
More Time to Make Improvements
When you live in your flip, you have more time for projects. You don't have to commute and your finances aren't limited by maintaining a second home. You can take it easy or drive yourself forward at your own pace.
Cons of Live-In Flipping
Chaos is the primary downside of the live-in flip strategy. You will be fully immersed in your project without a "normal" home to go back to.
Living in a Construction Zone
First and foremost, you will be living in a construction zone. Any major renovations will mean that your home is less than complete during your stay. The full extent of your renovations will determine just how chaotic or disruptive this experience might be. Maybe you'll love the camping aspect and have a great time, but some may be less suited to the construction zone lifestyle.
Contractor Traffic
Second, if you hire contractors they will be moving through your home whenever scheduled. This is one reason why live-in flipping favors DIY enthusiasts to minimize the strangers and work crews in your house.
No Relaxation Between Tasks
You may miss the ability to leave your flip and relax between tasks. Some people are great at watching a movie on their laptop and kicking back between DIY projects, but others need their own private space to decompress. Plan accordingly.
Finding the Right Flip Strategy for You
When deciding whether to live in your next flip, consider how the lifestyle suits your personality, preferences, and needs. Do you love adventure and camping? Do you thrive on chaos and perseverance? Are you a DIY crafter or does your flip need only a few cosmetic updates? If so, then a live-in flip might be a great way to save money on your next real estate investment project.
And if you're thinking twice about setting up camp in a major construction zone, you can always keep your dwelling separate and nearby.
Finding Tenants for Your Flip
If you have completed a successful flip and are ready to profit, Leaf Management is ready to help. We offer professional property management services to help you find and keep tenants in the homes you flip. Contact us today to learn more.
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