Lots of people get into flipping houses to flex their DIY muscle and, hopefully, turn a quick profit. But what happens if you’re a flipper who falls in love with their flip? If you find yourself wanting to settle your family in this particular home and really don’t want to move?
This question can go in so many different directions, but it’s really important to understand a few variables before making a decision.
In this case, we’ll assume the person is a live-in flipper. That means they buy a home, renovate it entirely, live in it for a year to avoid any capital gains tax, then sell the property and move on to the next flip.
At its core, this is an excellent way to make money for some people. However, if this is your primary source of income, the idea of not moving on to the next project poses an issue. If you don’t sell your current space, you won’t have the revenue or the cash available to do the next flip. That means you’ll be stuck in limbo for a little bit.
Our angle is simple: how much do you like this home? If you see your kids growing up in this home, if you fall in love with the neighborhood, the schools, the parks, the sport teams … then this is something that’s going to be very important in your life.
If you decide to stay…
There is a price to pay for quality of life, and that’s the balance we’re always trying to strike: quality of life versus income versus revenue versus investments, and so on.
So, if you really want to spend your life in this home, amazing! Step one will be to refinance it. Let’s get as much as we can back from the bank.
Step two is looking at the facts. You do this every year, which means you’re talented at flipping homes. Now, it’s time to look at either borrowing money from other people or getting a partner in on a few deals so you can regain that capital you’ve been using up.
And maybe after two or three years of using that other person’s capital, or partnering up with one or more people, you might be in a position to re-enter the market on your own. Sure, you might no longer have the capital gains write-off. But if you’re a talented flipper, you should be able to get the margins you need in order to continue your flipping business.