Real estate investors are using a two-part strategy to build equity and sidestep capital gains tax. Step one is buying a fixer-upper with potential. Then, you rehab to add value while living in it.
If you live in the home for two years before selling, you can capitalize on an IRS rule. Real estate investor Whitney Ekins-Hutten flipped her first property in 2002 with the help of friends, who she paid in "beer, sushi, and pizza." Over the past two decades, her strategy has evolved from flipping to long-term rentals to partnerships.
Her investments helped her achieve financial freedom and allowed her to quit her job in 2019. "There are so many ways to get started in real estate," said Elkins-Hutten, who is a financial educator and the author of " Money for Tomorrow ." "When somebody tells me they can't get started, it's usually lack of perseverance or lack of creativity and resourcefulness.
" She started with live-in flipping, which involves rehabbing a home to increase its market value while living in it. While labor intensive, "it's what I needed to do in order to get the money," said Elkins-Hutten, who used the cash to buy long-term rentals and generate cash flow. "The beauty of this strategy is you need a place to live," said Carl Jensen, who has done seven live-in flips with his wife Mindy.
"You'd be in a much riskier situation if you had bought a separate house that you need to flip as soon as possible because you're just pouring money into it, whereas we're just paying the.