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Matthew Hinton

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So I closed on my first investment property yesterday. It’s a 1900 sq ft, 4 bed, 3 bath, ranch style lake home on .9 acres. The plan is to renovate and sell within a year. Possibly use as a vacation rental but leaning more towards selling. I want to use the profits made from this flip to buy another home more suited for long term rentals.

It hasn’t been occupied for a solid year but it’s in pretty good shape. It needs flooring, wallpaper removal, painting, a new back deck, a few windows and some curb appeal. It’s had a new roof and vinyl siding installed within the past 5 years.

I’m hoping to have less than $20,000 in renovations and plan to do most of the work myself. My realtor believes that I could sell at a price that would net me $50,000 after the renovations have been made.

I will be cleaning the junk out of the house tonight and plan to install a driveway, start removing carpet and wallpaper next week.

If you have an opinion on resale vs. vacation rentals I’d love to hear it. I’d be happy to answer any questions. Stay tuned for updates.
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Strategery

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Nice dude!
I wouldn't think in terms of just "vacation," depending on where it is. Sometimes traveling professionals airbnb for long periods of time.
 

Matthew Hinton

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Nice dude!
I wouldn't think in terms of just "vacation," depending on where it is. Sometimes traveling professionals airbnb for long periods of time.

Thanks! The reason I say vacation rental is because of the lake. The home cost too much to justify doing a long term rental. I would need around $1,500 a month from a tenant to justify it and I don’t see that happening around here. It’s a poor area outside of the lake homes. AirBnB is something I’m kicking around but I need to look into it more. A traveling professional looking to stay for a month or so would be great. As it sets right now it could sleep more than 10 people which would lend itself nicely to AirBnB.
 

Creep

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Looks great!
Honestly id sell once you're done. How much is it gonna cost you to sit on a house that you use on occasion vs visiting an airbnb/cheap hotel elsewhere?

You could also rebuild it into 2 rental units, if that makes sence to do.
Looking forward to updates!

Good luck!
 

Darius

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It needs flooring, wallpaper removal, painting, a new back deck, a few windows and some curb appeal

If you're doing all the work yourself, you can be well under the $20k budget if that's all you're doing.

I'm almost done renovating one of my 1k sq/ft. units myself and I'll be around $25k-$30k spent but I repaired framing, all new plumbing, new electrical, 300ft french drain to help drainage around property, new bathroom, new flooring, recessed lights everywhere, new appliances, new cabinets, wall insulation, new water heater, new brick steps, new trim, and probably more that I'm forgetting.


If you have an opinion on resale vs. vacation rentals I’d love to hear it. I’d be happy to answer any questions. Stay tuned for updates.

I vote for sell it. If you can net $50k, that would be an easy decision for me based on what you said about the area and not being able to get the rent you'd need to make this work as a long term rental
 

Lucky Lu

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Congratulations!!! Looks really cool,

Where is the property located? And It is too intrusive to ask how much did you pay for it?
If you saw my other thread you would know that I am looking into my options and all info is useful!
 

Matthew Hinton

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If you're doing all the work yourself, you can be well under the $20k budget if that's all you're doing.

I'm almost done renovating one of my 1k sq/ft. units myself and I'll be around $25k-$30k spent but I repaired framing, all new plumbing, new electrical, 300ft french drain to help drainage around property, new bathroom, new flooring, recessed lights everywhere, new appliances, new cabinets, wall insulation, new water heater, new brick steps, new trim, and probably more that I'm forgetting.




I vote for sell it. If you can net $50k, that would be an easy decision for me based on what you said about the area and not being able to get the rent you'd need to make this work as a long term rental

Well, that’s not all that needs to be done but that’s definitely the majority of it. Unless I find something that needs addressing later. I did forget to mention that it needs appliances as well so thanks for the reminder.

The 20k was a generous rough estimate but I am glad to hear that you think that’s high. I appreciate the insight!

I am pretty certain that I can net 50k on this home if all goes well. Selling is definitely the plan as of now. As I said earlier, the goal is to buy rental units. I’m using this flip as a means to buy more investment properties.

Thanks for casting your vote!

Edit: I said, “Net” but didn’t deduct for capital gains. I’m figuring for a tax of 34% on that 50k which would be 17k. 50-17= 33k.
 
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Matthew Hinton

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Congratulations!!! Looks really cool,

Where is the property located? And It is too intrusive to ask how much did you pay for it?
If you saw my other thread you would know that I am looking into my options and all info is useful!

Thanks! The property is located in rural Kentucky on a small lake. That’s as transparent as I want to be on the location. I gave 120k for it and am approved for 40k to do the remodel. I can’t imagine using that much for the renovation but it’s there if I need it. I gave no money down but used the equity in my home to cover the down payment.

I’m planning to put it on the market at 230k and selling for about 200-210k. I have several comparable property evaluations to support those price points.
 

Lucky Lu

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Thanks! The property is located in rural Kentucky on a small lake. That’s as transparent as I want to be on the location. I gave 120k for it and am approved for 40k to do the remodel. I can’t imagine using that much for the renovation but it’s there if I need it. I gave no money down but used the equity in my home to cover the down payment.

I’m planning to put it on the market at 230k and selling for about 200-210k. I have several comparable property evaluations to support those price points.
Great job. I hope your success exceeds your expectations.
 

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Matthew Hinton

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Time for an update. Things have been going really well on the house. I haven’t uncovered any major issues so far. It feels like it’s been moving pretty quickly.

I’ve got the interior stripped down and have been working on finishing up the drywall. I have six windows that need replacing and that’s holding me up.

Originally, I planned to do most of the work myself. I’ve decided that if this is something I want to continue doing I’m going to have to contract out everything I can. It’s hard to get much done in the evenings after work and the weekends just aren’t long enough. If I contract almost everything out I see no reason why I couldn’t do this with several houses a year.

In the beginning I thought money was going to be a big limiting factor. I haven’t spent a dime of my own money on this house. I have good credit and about $30,000 worth of equity in my primary residence. I can use the equity for down payments and the money I make off flips to pay off the homes I buy for rentals.

My game plan is to sell this house and use the money to put a large percent down on 2 homes for long term rentals. The faster I pay them off the more cash flow they’ll produce. I’m thinking I’ll just keep repeating that process over and over. Find homes to flip and use the money to buy rentals. I plan to start shopping for the next home soon.

I’ve been looking into a 1031 exchange when I sell this property to avoid capital gains. Everyone I ask about this has a different opinion. It sounds like it’s a good idea to me if you plan to keep what you buy after the exchange. If I buy something to use as a long term rental I would plan to never sell which would mean that I would avoid the taxes.

What am I missing here? Does anyone have experience with a 1031 exchange? It sounds like the way to go from what I’ve read but after talking to my loan officer and a few tax professionals I’m not so sure.
 

Matthew Hinton

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It’s been awhile since I’ve posted an update but the house is close to being ready to put on the market.

Floors are done, drywall and painting is finished, concrete sidewalk and patio has been poured, new windows, cabinets, doors and gutters have been installed. I took out the stairs that went over a cliff and to the lake and built a road that you could drive a utv down. I’m probably leaving stuff out but those are the major things.

As of now I need to hang light fixtures, set 2 toilets, install countertops, replace bath and water fixtures and some other small things. I’m hoping to have it listed by the end of July.

In other related news, I submitted an offer on another lake house that is about to be foreclosed on. It needs much less work and I believe I could have it ready to put on the market by the end of this summer.
 
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Bennett

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Second property looks solid! Have you considered washing the deck and outside wood with TSP and lightly pressure washing it? I did this on a flip property I bought a while back and it totally restored the wood to look great before restaining / sealing it.
 

Matthew Hinton

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Second property looks solid! Have you considered washing the deck and outside wood with TSP and lightly pressure washing it? I did this on a flip property I bought a while back and it totally restored the wood to look great before restaining / sealing it.

Thanks! Is TSP some sort of cleaner? I do plan to pressure wash but I haven’t done anything to that house yet. There’s still a few things I need to do at my first property but hopefully I’ll be able to start on the second one soon. The first property has vinyl siding that had something similar to moss growing on it. I put 1 quart of bleach in one gallon of water and sprayed it on the house with a weed sprayer. I let it sit for about 30 minutes and pressured washed it. It made such a difference that many of the neighbors thought I put all new siding on it!
 

Matthew Hinton

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First property will be going on the market tonight. I need to go over all my expenses to be for sure but I think I’ll have about $160,000 in it. Comps put the sale price at $350,000 so it’s getting listed for $349,500. I know. Seems crazy. Thanks COVID . Things around here have been going fast.
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traction2

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First property will be going on the market tonight. I need to go over all my expenses to be for sure but I think I’ll have about $160,000 in it. Comps put the sale price at $350,000 so it’s getting listed for $349,500. I know. Seems crazy. Thanks COVID . Things around here have been going fast.
View attachment 34707View attachment 34708
Wow congrats that's some gain.
Where have you been sourcing these properties?
 

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Matthew Hinton

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Wow congrats that's some gain.
Where have you been sourcing these properties?

It’s not sold yet so we’ll see. The market for lake homes in this area is crazy right now.

Both properties have came from postcards sent to distressed looking homes. Grass was tall, they needed work etc. I make a note of every rough looking property I see.
 

traction2

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It’s not sold yet so we’ll see. The market for lake homes in this area is crazy right now.

Both properties have came from postcards sent to distressed looking homes. Grass was tall, they needed work etc. I make a note of every rough looking property I see.
Freaking awesome man.
I always wonder though, once you pitch the owners, why don't they seek comp values or get with an agent to get market value?
 

Matthew Hinton

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Freaking awesome man.
I always wonder though, once you pitch the owners, why don't they seek comp values or get with an agent to get market value?

I wonder the same thing. The first house was bought from a guy that inherited the property and hadn’t been down for a few years. I’m guessing he was happy with the offer and didn’t want to deal with listing it. The second house was about to get foreclosed on. They didn’t have the time to shop it around. It was just lucky they got the postcard when they did.
 
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Matthew Hinton

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Amazing thread! Hope the sale goes well and well done on taking some big action.

Thanks! It feels great to have that place done. It took a lot of work. 8 months of working almost every evening and weekend. It was a good learning experience though. I didn’t know much about construction but now I feel like I could build a house from the ground up. Going forward I would like to hire more things out.
 

Matthew Hinton

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Here’s a little progress on flip #2. Dormer has been added in bedroom for egress. It wasn’t technically a bedroom without it and couldn’t be marketed as a bedroom without a window. Also added a wall closing the loft off for privacy. Steps were added to the back deck so that you could walk down to the yard. The laundry room is being converted into a 3rd bedroom. Finally, the exterior has been pressure washed. All of the work has been hired out on this one so far.

Flip #1 has had a little interest but no serious offers so far.
 

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WJK

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So I closed on my first investment property yesterday. It’s a 1900 sq ft, 4 bed, 3 bath, ranch style lake home on .9 acres. The plan is to renovate and sell within a year. Possibly use as a vacation rental but leaning more towards selling. I want to use the profits made from this flip to buy another home more suited for long term rentals.

It hasn’t been occupied for a solid year but it’s in pretty good shape. It needs flooring, wallpaper removal, painting, a new back deck, a few windows and some curb appeal. It’s had a new roof and vinyl siding installed within the past 5 years.

I’m hoping to have less than $20,000 in renovations and plan to do most of the work myself. My realtor believes that I could sell at a price that would net me $50,000 after the renovations have been made.

I will be cleaning the junk out of the house tonight and plan to install a driveway, start removing carpet and wallpaper next week.

If you have an opinion on resale vs. vacation rentals I’d love to hear it. I’d be happy to answer any questions. Stay tuned for updates.
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Since this is the first time, you might wanna rethink your plan. You also might think about making it your personal residence for the next two years. Then it should fall under the Federal rules exempting it from those taxes. It would give you more time to do your repairs and hopefully take some pressure off of you. I know investors who move every 2 years. They do one house after another. Or you can convert it to a vacation rental.

The way it sits, it needs TLC to anything with it. Next summer, I'd bleach those stairs and refinish them. They could be a real asset to the house. And it needs curb appeal. Most of that is elbow grease and making the exterior low mantenance. You might think about a version of a natural yard that will blend into the setting. On the interior, I'd go with a hard floor rather than carpeting. It last longer and it's easier to keep nice. There are a lot of improvements that you can make that won't cost a lot of dollars.
 

Matthew Hinton

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Since this is the first time, you might wanna rethink your plan. You also might think about making it your personal residence for the next two years. Then it should fall under the Federal rules exempting it from those taxes. It would give you more time to do your repairs and hopefully take some pressure off of you. I know investors who move every 2 years. They do one house after another. Or you can convert it to a vacation rental.

The way it sits, it needs TLC to anything with it. Next summer, I'd bleach those stairs and refinish them. They could be a real asset to the house. And it needs curb appeal. Most of that is elbow grease and making the exterior low mantenance. You might think about a version of a natural yard that will blend into the setting. On the interior, I'd go with a hard floor rather than carpeting. It last longer and it's easier to keep nice. There are a lot of improvements that you can make that won't cost a lot of dollars.

Thanks for the advice!

So after asking around it seems that living in the place for 2 years is the only way to avoid the capital gains taxes. Unfortunately that’s not something I can do at the moment but I definitely like the idea.

I’m thinking that after the first property is sold I’ll use that money to pay off the mortgage of my primary residence. After I do that I can find a home to live in for 2 years to avoid taxes. I don’t want to be paying multiple mortgages. I still plan to flip some homes without living in them though. I’d like to do more than 1 home every 2 years. The taxes are high but I guess that’s what it takes to play this game.

Here’s a brief description of my plan for moving forward. Sell flip #1 and pay off my mortgage on primary residence (66k). Finish flip #2 and use profit for a down payment on something I can renovate and use as a full time rental. Flip another home and pay off rental home #1. That would get me somewhere around $800 of income a month per rental. Repeat the process until I can live off rental income. Along the way I’ll renovate a home and live in it for 2 years to avoid capital gains taxes while having other homes renovated. I want to hit this pretty hard.

Thoughts?
 

Sethamus

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It really depends on your long term goals and comparing what choice gets you their faster.

Depending on your timeline to turn a flip around you can do a lot to make this look good if you have time and basic skills. Faster turn around means less holding cost and more profit, do not get stuck doing stuff out of your skill range or very time consuming to save a few hundred dollars. Also, talk to your realtor about your market and when is the best season to sell or is the next 2-4 months look to be the best with the current market. That will give you a better timeline.

Vacation rental needs the same facelift, but a focus on creating "moments" to make someone rent. That outdoor deck to the lake would be a huge focus for me and views to the lake from the inside. I personally would keep that Golden tee and make a little game corner (board games, darts-with HUGE cork board behind it so less dmg, and the golden tee). That would be a highlight few vacation rentals would have.

Next summer, I'd bleach those stairs and refinish them
Bleaching? Do people in the North not use pressure washers to clean their decks and fences?
 

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