How many rehabbers do all/some of their own work? - Posted by Carl

Real Estate Investing
#1

Posted by Nate(DC) on February 17, 2002 at 22:36:18:

Carl,

Why not lease-option the house for at least a year and then sell it. At least that way the gains will be taxes as long-term and not short-term. Just a thought.

Also if the numbers are good enough, you do not have to live in the property WHILE it is being rehabbed. Buy it, fix it, THEN move in for two years, and then sell it. You might find there are still significant tax savings doing it that way, even when the costs of holding two properties at once are figured. And, your wife will be happy, which is more important anyway to your longterm success and happiness.

NT

#2

How many rehabbers do all/some of their own work? - Posted by Carl

Posted by Carl on February 12, 2002 at 11:35:16:

I’ve been rehabbing for a little while. I buy junkers and OO while I work on them myself. I allow myself a minimum 2 year work window to qualify for the gains exemption, so I’m not in any particular rush to get things done. I’ve also held a full-time J.O.B. during the rehab. The gains are substantial - I should net 150K on my current project - which is why the exemption is important to me.

My wife has grown tired of living in a construction zone, so I’m thinking this is my last project of this kind. What other kinds of approaches have you used? How can I make my wife happy, and still qualify for the exemption?

#3

My Guess is Not many - Posted by Frank Chin

Posted by Frank Chin on February 15, 2002 at 09:59:43:

Hi Carl:

I saw a few posts from a fellow named DanT who says he does his own rehabs. For part time REI, I don’t think it pays.

I heard of people holding a job doing updating rehabs on weekend for 6 to 8 months. Based on $1,400/month market rent for an apartment, he’s out almost 10K in rents.

Meanwhile, such projects may only run 10K to 15K.

So, I don’t think its cost effective for weekend rehabbers. I just finished doing a fixup of a SFH that took me 15 straight days of work. It would’ve cost me over 3K to hire someone to do it. I think I did a better job.

Had I done the same holding a job, would’ve taken me two months of weekends. The place rents for 2K a month. I’m ahead of the game hiring someone to do the work if I had a job.

Frank Chin

#4

Re: My Guess is Not many - Posted by Carl

Posted by Carl on February 16, 2002 at 08:55:35:

Thanks for the reply Frank. My wife and I actually occupy the house we’re fixing up, so holding costs are not an issue. What is the major issue for my wife is endless dust, walls of open studs, piles of trash waiting to go to the dump, bathrooms with no fixtures, etc. while work is in progress. She has lost her patience to live in a construction zone. She may change her mind when we get paid for this one.

I don’t want to sell the house in less than two years, or I’ll have to pay taxes on $150K (no thank you).

This problem may have just solved itself, I’ve recently been laid off from my J.O.B. and can dedicate 100% of my efforts towards REI. Maybe we’re ready for the big time. Wish me luck…

Carl