What Is Your Exit Strategy For Single Family Houses
How many of you buy rentals with the intent to hold on to them until they are paid off, thereby, creating the passive income for yourself when you are retired? On the other hand, who buys rentals, holds them for a couple of years, then sells them and reinvests the equity into another rental? Basically using the latter strategy to qualfiy for long term capital gains tax, get the equity, and to aviod the costs of rehabbing the same house again in a few years.
fix and flip has been my rule of thumb.
Im mostly a buy and hold.....I think I am pretty objective, even when looking at my own situation. I have to say, this buy and hold thing aint all its cracked up to be. now, talk to me in ten years when we have seen another good run. for now, that buy and flip looks pretty good.
when i first started i told myself i would try at least one of everything and find out what i liked the best. im still working my way through the list, but so far buy and hold is the easiest, IMHO. L/O, sub-to, construction, flip, all took me more work than buy and hold and pre-construction. that being said, the deals where i dont have to mess with renters, insurance, prop managers, etc. were pretty sweet.
lately ive been doing 100% financing (yup, still out there) on rehab property. i buy, fix, put a 30yr fixed loan on the first and the same on the second. then rent to a break even. (which rarely really breaks even) my plan is to wait for the next run, sell some and use the money to pay off others and just have steady cash from rent. that could change, but for now thats the plan.
CJ how are those flips going these days?
[ Edited by bnwbaron on Date 11/08/2007 ]
I was a fix and flip. Am now a buy and hold due to the lousy economy.
I really do not like renting but sales are slooooow right now.
Even equity loan terms have gotten super tight.
My original plan was just to fix and flip. Then as I got more educated and learned of all the taxes I had to pay on each flip I deciced to hold and rent for a while and just sell each one sometime after a year hold time. Problem is that really does not create passive income. It may create some passive income for a while but it puts me in the situation of always having to be out there searching for another rehab which is the same as just having another job.
Yes, paying off the rentals as soon as possible always seemed to be a good idea to me but then when I look at the ROI of a paid off property then its not so good. Lots of equity not making anymore than the average return of the stock market. That is my delima. Pay the property off or leverage the equity and buy more and capture more equity. I guess it depends on wether a person is investing for cash flow or equity.
Have you talked to a good CPA and Tax Atty to deal w/ or help the tax situation?
Quote:
On 2007-11-08 09:22, WGA wrote:
My original plan was just to fix and flip. Then as I got more educated and learned of all the taxes I had to pay on each flip I deciced to hold and rent for a while and just sell each one sometime after a year hold time. Problem is that really does not create passive income. It may create some passive income for a while but it puts me in the situation of always having to be out there searching for another rehab which is the same as just having another job.
I see a buying opportunity in MF. All those foreclosed people need to live somewhere.