Author Topic: Anybody have experience moving home regularly in order to get ahead financially?  (Read 3570 times)

garyjames8

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  • 45 / 58% SR / RE Targets: 27.11.2023 & AU$1million
Hi,

Does anybody here leverage their knowledge and experiences in real estate to move home regularly for financial gain?

This idea doesn't seem to get mentioned much here.

The reason I ask is that I am thinking of doing this myself and looking for advice and guidance from those that do this successfully.

Kind Regards,

Gary

PS. For clarity, I am a dual citizen (UK and Australia)...and am looking to do the above in the U.K.

« Last Edit: December 01, 2016, 07:24:15 AM by garyjames8 »

PDM

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Hey,
Not sure what you mean, do you mean buying a place doing it up then flipping it? I'm not sure it is particularly easy or profitable - especially after costs, stamp duty, capital gains tax etc. It is really just speculation on capital gains. Given how expensive housing is in Australia it is risky too - a lot of money needed to make what might be limited gains.

Playing with Fire UK

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http://www.coachcarson.com/getting-rich-live-in-flip/

The folks over at 1500days did something similar to this (post above). It depends on the transactional costs and how much value you can add.

garyjames8

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  • 45 / 58% SR / RE Targets: 27.11.2023 & AU$1million
Hi Playing with Fire UK,

Many thanks for the great link.

Greatly appreciated.

It is comforting to find out from reading the blog post that there is an actual and established phrase for this...the "Live in Flip".

Thanks again.

Kind Regards,

Gary

Playing with Fire UK

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You are welcome, I've been doing a slow version of this (five and three years so far). I think my SO is going to request we stay a bit longer in the next one though!

Coach Carson

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Thanks Playing With Fire UK for sharing the article on my blog. Mr. and Mrs. 1500 are the poster-children for making that strategy work.  Like all real estate, you need to do a couple of important things:

1. study your market to understand the values
2. find properties with potential to increase the value with repairs

For example, you might find a house that you can buy for $250,000, put $50,000 repairs into it, and it be worth $400,000 in 2 years. That would be a great deal, so it takes a lot of hunting around.

My question for you both being in UK is whether the tax laws are similar and let you avoid capital gains tax when selling your principle residence? U.S. and Canada both do, I believe.  But I'm not familiar with UK.

I wrote another article about using the same Live-in Flip strategy to own your home free and clear in 6 years. You might also find it helpful:
http://www.coachcarson.com/live-in-house-flips-free-clear-home-6-years/

Good luck!

Playing with Fire UK

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Yes, we avoid CGT on your primary residence. A married couple has one primary residence between them. You only have one primary residence at a time. There is no time limit, you can buy and sell within a month and avoid CGT. There are some complexities if a house has been your primary residence for only part of the time you've owned.


garyjames8

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  • 45 / 58% SR / RE Targets: 27.11.2023 & AU$1million
I did a bit of research on this earlier today. The rules seem to be laid out here: 

https://www.gov.uk/tax-sell-home/private-residence-relief

It seems a bit more straight forward in the UK than the USA.








garyjames8

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Hi ClemsonInvestor,

Thanks for the 2nd article by the way.

Much appreciated.

Kind Regards,

Gary

SwordGuy

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One of the insurance investigators who was documenting a rental property we had just purchased told me about his mom.

She would buy a home that needed a good bit of work and move into it.  Naturally, she picked one that would be worth a lot more after it was fixed up (even including the cost of repairs).   She would do so every 2 to 4 years.

(In the USA, the profits from the sale get taxed very differently after the 2 year marker.)   Her comment was the 4th or 5th house would be free.  (I.e., the profits from the prior deals would pay for it.)  She recommended such a strategy to everyone trying to get ahead.

Think about it.   Pay on a mortgage for 8 to 14 years, plus the repairs.  Then own a house - not only free and clear - but free.  All the money you had been paying would be back in your pocket.

It's hard work but it's a great way to get ahead.

Playing with Fire UK

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She would buy a home that needed a good bit of work and move into it.  Naturally, she picked one that would be worth a lot more after it was fixed up (even including the cost of repairs).   She would do so every 2 to 4 years.

This is broadly my plan; There is a natural limit to how quickly you can do a live-in flip (rather than renting and flipping). It will vary for different families/individuals based on how much stuff you have, how much mess you can tolerate and how long you want to live in a house with nothing more to do!

One thing to highlight in the UK is that we pay Stamp Duty every time a home ownership is transferred, although our buying and selling fees look lower than yours (there is rarely a buying agent and selling agent fees are closer to 1%).

Jon Bon

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YES!

I cannot think of a better way to make a large amount of money tax free. It takes me a long time to pile up $50,000 from my day job, but you can do it every 2-3 years with your home.

I feel its is one of those situations where people are too afraid, too bothered by the inconvenience, or too busy to try this. Many young buyers don't want to do a dang thing to their house. They want a 100 year old home but with HGTV finishes. So I buy said 100 year old home, do my best to give it the best HGTV treatment and sell it to some young professionals.

Granted some of this is timing, I was buying houses starting in 2009, so yeah there was a bit of lucky timing. Still where the hell else can you keep all the profits?!

I cannot speak to those of you overseas.... YMMV




garyjames8

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  • Location: Darwin, NT, Australia.
  • 45 / 58% SR / RE Targets: 27.11.2023 & AU$1million
Hi Jon Bon,

Many thanks for responding to my post.

Greatly appreciated.

I hear you loud and clear.

The idea seems like a great one.

Again, many thanks for your words, greatly appreciated.

Kind Regards,

Gary

Playing with Fire UK

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I feel its is one of those situations where people are too afraid, too bothered by the inconvenience, or too busy to try this.

I think for some people the inconvenience or their lack of skills is too much of a barrier. I spent a month living without a shower. Not everyone would do this. When I rewired my house, there was dust everywhere, we'd clean everyday but never actually be clean.  This would be a lot harder if there were children involved (or if I didn't have a shower at work).

But the fact that you can do the work to fit in with your schedule and keep the profit (compared to getting a second job and working someone else's hours to make someone else rich) makes it a winner for me.

Linea_Norway

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In Norway this is done often by handyman. They buy an old and crappy house. Renovate it and live in it for minimum 2 years. After 2 years, they can sell it without paying taxes over the profit.

humbleMouse

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This is currently my strategy.  I don't know if I will end up selling my home, but I expect it to increase in value substantially (50-100%) in the next 3-7 years.  At some point I will either sell or refinance to leverage the equity into another investment. 

The house I bought is over 100 years old but most of it has already been updated with nice finishes.  I am going to add some finish in the attic and in the basement to drive the re-sale value up. 

However, I think the biggest factor that will drive my home price up is the neighborhood.  It is in one of the last un-gentrified places in minneapolis. 

Anecdotally, I know somebody who used the gentrification real estate strategy in Chicago and New York.  This fellow started with a 200k property in chicago and now lives in a 2 million dollar custom home in a gentrifying neighborhood in brooklyn. 
« Last Edit: December 11, 2016, 04:46:19 PM by humbleMouse »