Change Houses Successfully – My Strategy

This is my strategy for trading houses successfully. Focuses on slow and steady growth while providing experience and an understanding of the industry.

Flipping the turtle house

As the subtitle suggests, my method of flipping houses is slow and steady. It is designed to accomplish three goals: first, to make money relatively quickly; two, provide him with the house of his dreams (if he wants) in four to six years; and three, avoid tax penalties that may be associated with property sales. It is true that under this method you may need an alternative source of income, at least at first. But without that day job, there would be no time to daydream about installing that new tile or selling that flip for a big profit, right?

Using this method is easy. First, find a flip that only needs minor cosmetic and/or non-structural fixes. For example, new paint, tile, countertops, carpet, etc. This is important because you will be expected to do some of the work on your own (don’t worry, you will have time to do it). Also, when looking for a property, pay special attention to the exterior. If new paint or flowers, or ripping out a stump from an old tree, would transform the cartwheel, make a note of that. It is these changes that, while small to you, will have a profound effect on your buyer.

Also, when looking for flips, stay in the market for something a new or second/third home buyer could afford. New or second or third owners know what they want but don’t have outrageous expectations. They may want granite and marble in their home, but are willing to cut corners and get something of a slightly lower quality that still looks good.

After you find and buy the flip (strategies on this will be discussed later), you will move on and start the upgrade process. That’s right, I said you’re going to flip. Why would you do this? Two reasons. First, if you live in a flip for two years, it’s a residence and you’re subject to a 15% capital gains tax (vs. 35% if you don’t) on your earnings. The other reason is that you’ll be doing a lot of the work on your own (whatever you can do), so you have to live there while you’re doing it. See, flipping houses successfully is easy!

However, don’t panic. By flipping under this strategy, you will be able to live there without problems. The trick is to move from room to room, completing one at a time (painting, for example) until you have a great look worth a ton of money. If you have another job, it will take time to do this. However, believe it or not, you can usually prep and paint a room in a weekend easily. You just have to get going!

Once the flip is done and sold, take all the money you made and move on to the next flip. The key here, however, is that if you move laterally (buy a house of the same value as your original flip), you must have enough equity built into the flip that you can use to improve your new flip. So no money out of your pocket, you get the second release that looks great, you sell it for a ton of money, and you get the next property. Eventually you have enough coin to buy flips with cash!