The Best “Early Retirement” Strategy 99% of Investors Ignore

Want to retire early? What about early retirement AND making millions of dollars tax-free? Only one real estate investing strategy gives you the ability to do both, but 99% of investors won’t try it. Why? We don’t know because today’s two guests, as well as Dave, are all using this investing strategy in 2025 to make a killing on their real estate deals. It’s not house hacking, it’s not medium-term rentals, and it’s not private lending—it’s live-in flipping. Never heard of live-in flipping? There’s a good reason—nobody is doing it, even though it boasts the biggest benefits of almost any real estate strategy out there. This method enabled Mindy Jensen to accumulate millions of dollars in net worth by her early 50s, much of which was tax-free. The same strategy is being used by Ashley Kehr and Dave to make hundreds of thousands of dollars in profit simply by buying a house, fixing it up while living in it, and reselling it. How does this get you to early retirement? Simple: you make hundreds of thousands tax-free, more than what your job might pay you over several years, dramatically boosting your bank account and allowing your investments to multiply way faster. Anyone can do it—whether you’re single, have a partner, or kids—and the benefits are unbeatable. Wanna know how to start? Mindy, the expert on live-in flips, is sharing her secrets in today’s episode. In This Episode We Cover Live-in flipping 101, the best real estate strategy for tax-free millions What type of house makes the best live-in flip (with the highest profits) What level of renovation to put into the house (DON’T pick your favorite upgrades) Tips to keep your family comfortable while live-in flipping, especially if you have kids Financing a live-in flip and one easy way to get a lower interest rate And So Much More! Check out more resources from this show on ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠BiggerPockets.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://www.biggerpockets.com/blog/real-estate-1133 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠[email protected]⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Learn more about your ad choices. Visit megaphone.fm/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Dave Meyer?

  This overlooked real estate strategy can put you on the path to early retirement with millions of dollars in the bank. Both of today's guests and I are all doing it right now. Spoiler, it's not traditional house hacking. In this episode, we'll break down how to add huge value to your portfolio, all tax free.

• 0:25Dave Meyer?

  Hey, everyone. I'm Dave Meyer, Head of Real Estate Investing at BiggerPockets. I've been buying rental properties for 15 years, and now I'm teaching you how to secure your financial future, too. Today, we're talking about a strategy called the live-in flip. It's not exactly house hacking. It's not exactly house flipping, but it combines the best elements of each, provides huge tax-free returns, and can be less disruptive to your day-to-day life than you might think. I'm personally going to start working on a live-in flip in the next couple of weeks, and I was talking about it with my colleagues at BiggerPockets, and two of them are doing the same, so they're joining me on the show today to talk about them. Ashley Kair, how are you?

• 1:09Speaker 01

  Good. Thanks so much for having me on today.

• 1:12Dave Meyer?

  Absolutely. Is this your first live-in flip?

• 1:15Speaker 01

  Yes, it is.

• 1:16Dave Meyer?

  Okay, mine too. But we also have Mindy Jensen on, and Mindy, welcome to the show, first and foremost.

• 1:23Speaker 02

  Thank you, Dave. It's lovely to see you. Hi, Ashley.

• 1:25Speaker 01

  Hi.

• 1:26Dave Meyer?

  Now, show us up, Mindy. How many live-in flips have you done?

• 1:29Speaker 02

  I am in my 10th.

• 1:31Dave Meyer?

  Okay, yes. So, this is just going to be Ashley and I asking you for personal advice this entire time, then. All right, let's get into it. First and foremost, let's define what a live-in flip is for anyone who doesn't already know. Live-in flip is basically when you live in a house, you renovate it, and then you sell it. So, it basically combines your primary residence with a flip. And this might sound really obvious, or maybe not even like an investment, but there are a couple of reasons why this is such a good strategy. At least, there are reasons I like it. The first is that you owner-occupy it, which means you can get usually better financing terms. The second is Because you're living in it, you can go at a more casual pace than you would with a traditional flip.

• 2:15Dave Meyer?

  And third, you can still build huge amounts of equity like you would with a traditional flip. But if you live in that property for two years or more, when you go and sell it, all the gains that you get are tax free. When you compare that to a traditional flip, that is actually taxed not at capital gains of 20%. It's actually taxed at your ordinary income rate, which is usually higher than that. So the reason this is so great is it gives you a place to live. You can build massive amounts of equity. And when you go and sell the property, you are able to get all of those gains tax free. Those are at least the reasons why I like live in flips and why I am about to take on my first. But Mindy, what are the reasons you like?

• 2:58Speaker 02

  I first did this in 1998, selling in 2002. So I lived there for four years and I made, again, it was the time, $25,000 on a condo that I bought for $50,000. I paid off all my debt and at the time I was making $24,000 a year. So I was like, whoa, and I'm paying taxes on that 24,000. I got 25,000 for free.

• 3:24Dave Meyer?

  Wow, that just demonstrates the power of the live in flip. Ashley, tell me a little bit, why, why is this appealing to you? And why are you choosing to do your first one now?

• 3:33Speaker 01

  I think there's just a huge advantage as to how you can purchase the property. You can get very good loans for it being your primary residence. I have the flexibility now, I guess, where it doesn't really matter where I live. And I think the fact that this is a really attractive, easier way to invest in real estate, where you can get that tax free gain. So instead of spending all this time working on building up money to buy this already done primary residence, I'm just going to suffer a little and live here while the proof happens.

• 4:10Speaker 02

  I mean, you need to live in a place anyway, during those two years, you might as well live in a place that is going to make you money because your primary residence isn't technically an investment. It is a place to live and my primary residence is an investment because I bought very ugly, very low, and I've spent a lot of time fixing it up. So when I sell it, I'm going to make a lot of money tax free.

• 4:34Dave Meyer?

  Well, this is just one strategy. I rally against this all the time on the show. I hate when people say that your primary residence isn't an investment. And there are very prominent real estate educators who say that. I just think it's a choice. Like, if you just go out and buy a really recently flipped house on Zillow and pay a lot of money for it, yeah, that's probably not the best investment for you. But you can make your primary residence investment, whether it's a house hack or a live-in flip. So all of us are choosing to do that. Ashley, where are you in this stage? Have you already closed? Are you in the midst of it right now?

• 5:09Speaker 01

  Yeah, so I actually bought it using a private money lender. So I didn't buy it using a primary residence home. So that way I could kind of do like a mini burr with it. So it actually sat vacant for four years. When I closed on it, there was a bunch of stuff that needed to be done immediately. So we rushed and within three weeks, we got it like livable, like there was no running water. We had to replace all the plumbing. The septic had like a leak in it. We had to get that cleaned up, everything. So we got moved in and then we did a couple of things just for appraised value. And now we're going through the refinance process. And then when we are done refinancing, then we'll go and

• 5:51Speaker 01

  use that money from our done payment and the other rehabs we already did and go ahead and do more to the property.

• 5:57Dave Meyer?

  Okay, well, I do want to turn the conversation to sort of a step-by-step approach here, like how we can approach this, if you're interested in doing this type of thing. But Mindy, I want your opinion on the misery. You've done this 10 times now. I'm sure for a lot of people listening to this, it sounds terrible. You know, you're living in a construction zone. You're like constantly managing these things. Is that the reality? And if so, is it worth it? Or are there sort of ways that you can mitigate how challenging it is?

• 6:24Speaker 02

  Uh, yes, it's worth it because I am cashing giant checks at the end of it. And that makes it all worthwhile. Like you just don't even remember the pain that you went through. And you're like, wow, I, the last house I sold, I got a $276,000 gain.

• 6:41Dave Meyer?

  Wow. Tax free.

• 6:42Speaker 02

  Tax free. Yeah.

• 6:43Dave Meyer?

  So it's like basically earning like 400 grand.

• 6:45Speaker 01

  Yeah.

• 6:46Speaker 02

  Yeah, exactly. Yeah, it is a huge amount of money that I then roll into the next property or put into the stock market, depending on how much it is. The next property I bought for $365,000.

• 6:58Dave Meyer?

  Wow.

• 6:59Speaker 02

  That's the one that I'm sitting in now. This house is a sort of a cookie cutter house in a neighborhood where there's a lot of other houses just like this. And one sold in the run up in 2022 before rates changed. One of this model house sold for $850,000.

• 7:16Speaker 01

  Wow. And you bought it for three something?

• 7:17Speaker 02

  Yes.

• 7:19Dave Meyer?

  Mindy, you are, you are very good at this.

• 7:22Speaker 02

  My house was super gross. Like this house was a smoker's house. I bought it from the original owner. They smoked in it for 40 years. And when I came to see it first, it had been sitting on the market for three weeks. They didn't open a window ever. And I walked through the house. I was here for probably an hour. I had to go home, take off my clothes and put them in the washing machine and scrub the smoke smell out.

• 7:47Dave Meyer?

  Okay. Well, I mean, both of you also have a family. And so you're doing this with your family. Has that been a challenge for you, Ashley?

• 7:55Speaker 01

  No, I, a big priority was to finish the kids' rooms first.

• 7:59Dave Meyer?

  Okay.

• 8:00Speaker 01

  So like before we even had the, you know, anything with the downstairs even touched. And while the plumber was working on the plumbing, that's what we focus on is giving them these really cool bedrooms. So like

• 8:12Dave Meyer?

  Nice.

• 8:12Speaker 01

  Their bedrooms are done. So like if there's construction anywhere else, they at least have like their own space that's done and whatever, you know, they wanted in there.

• 8:24Dave Meyer?

  Who's doing the work? Are you DIYing it sort of like Mindy's style? Or do you have a contractor?

• 8:28Speaker 01

  So we did use a plumber to do all of the plumbing work. That was the really big thing. We didn't really have to do any electrical. And then Daryl refinished all the hardwood floors and then we used just a lot of subcontractors. Like we had a flooring company come in and put some carpet in the kids' bedrooms. We did the vinyl plank, like we redid a lot in the basement already. So we put down the vinyl plank, things like that. Any drywall repairs we've done ourselves.

• 8:54Dave Meyer?

  Oh, cool. You know, I haven't closed them on, I'm closing on mine tomorrow. So I have no idea what I'm doing.

• 8:58Speaker 01

  Congratulations.

• 9:00Dave Meyer?

  Thank you. Yeah, I'm excited. And I am intending to hire a GC to like basically do the entire thing. But Mindy, you're sort of on the other end of the spectrum too, right? You're, you basically do everything yourself?

• 9:12Speaker 02

  Yes, with my husband. And it's going to take us two years or we have to be there for two years anyway. So we don't have this mad dash to get it all done. On the other hand, you are living in a construction zone until you're, you're done. So it can be a little bit wearing on the family, especially the kids. If they are not excited about the project in the first place.

• 9:34Dave Meyer?

  Yeah.

• 9:35Speaker 02

  Having a space for them to go to, to call their own, to close the door and have it be just, I'm blocking out all of the dust and dirt and whatever is really important for getting them on track. But yeah, it is a super fun experience, Dave. You're going to have so much fun.

• 9:53Speaker 01

  Dave, are you going to move into it and then rehab along the way? Or are you going to redo it and then move in?

• 9:59Dave Meyer?

  I think we'll probably live in it for a couple of months to just like really decide what we want to do. And then intending to hire a contractor, estimates are like three to four months. It's a split level, so I'm hoping I can phase it where I redo the basement first. We can move downstairs and then do the upstairs. We'll probably still have to move out for like a week or two, but hopefully not having to move out for more than that. But we'll see how it goes. We do have to take a quick break, but when we come back, I want to talk step by step. If people are interested in this concept, how do you go from wherever your living situation is now to finding the right deal, figuring out your plan of attack, and then maximizing your ROI? We'll get to that right after this quick break.

• 10:43Dave Meyer?

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• 11:27Dave Meyer?

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• 12:09Dave Meyer?

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• 12:52Dave Meyer?

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• 13:34Dave Meyer?

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• 14:18Dave Meyer?

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• 14:29Dave Meyer?

  Welcome back to the BiggerPockets Podcast. I'm here with Ashley Kerr and Mindy Jensen talking about a strategy I've personally been sleeping on. I think a lot of people sleep on, which is the live-in flip. And now, we're going to turn our conversation to how to do this if you actually want to. So Mindy, maybe you can help us. If you're interested in this, what kind of properties do you normally target? Or is that even the right place to start?

• 14:53Speaker 02

  Well, it's not quite the right place to start, but we'll get into that into a minute.

• 14:57Dave Meyer?

  Okay.

• 14:58Speaker 02

  First, you need to know your market. You need to be able to hop on a property as soon as it pops up. And this is true for all investments. So what makes a good live-in flip? You need a city that has growth potential, or is in the middle, not the top, of the growth market. Once you've decided on a city, start really looking at the neighborhoods. What makes a good flip for me is an older home. 1970s build, I really love. 1920s build, I don't love. They've got that, I don't even know how to pronounce this, is it plaster and lath, or plaster and lathe?

• 15:32Dave Meyer?

  Lathe? Yeah, I don't know.

• 15:33Speaker 02

  That's wood slats with like mesh wire and then heavy, heavy, heavy plaster on top of that. And that's a pain to remove. I love a good drywall house. 1970s construction has modern construction techniques.

• 15:49Dave Meyer?

  Yeah.

• 15:50Speaker 02

  But if you can find an original owner, or who, like, maybe they did one remodel in the 80s and they're like, "We're good." That's a prime target for your house.

• 16:02Dave Meyer?

  Is that sort of what you targeted, Ashley?

• 16:04Speaker 01

  Actually, this was an accident. This property was my dad's friend. It was his childhood home. And his mom was really sick. And so they wanted to get rid of the house, and she wasn't living there anymore. And actually, right before we signed the contract, she ended up passing away. So then we had to wait for her estate to be put together, the executor of her will to be named, and that took a whole nother year. So I actually had it under contract for a year before we actually closed on it. And when I got it under contract, the intention was to just flip the property, but then... I was just outgrowing where we already lived and so we decided to rent that property

• 16:49Speaker 01

  out and move into this one. So it really like the market was great to flip the house. There was potential. I was getting it below market value. The rehab was very manageable for me. So the deal came to me before I was even looking for it.

• 17:04Dave Meyer?

  What is it? How old is it? I know like, you know, in Colorado, a lot of things are built 50, 60, 70s. In the Northeast, it could be pretty old.

• 17:12Speaker 01

  This one is 1950 and it was also just one owner the whole time.

• 17:16Dave Meyer?

  All right. So that's good advice on targeting a property. And Mindy, once you find and identify a property, what's the next step? Do you move in and then do a plan? Do you plan first? Or how have you done it in the past?

• 17:28Speaker 02

  Well, once I find the property on the MLS, I go and see it. And I am not a fan or an advocate of buying sight unseen. I want to be in this property. You can't smell a picture. I thought this house was just ugly. And then I walk in and that aroma of cigarette smoke for the last 40 years was really overwhelming. And that's one of the reasons why the house sat on the market for so long. I knew that it was ugly and needed a whole new kitchen, three new bathrooms. It had white carpeting. I don't even understand why they make white carpeting, but I digress. All of the beams, the exposed beams were this like weird orange

• 18:08Speaker 02

  color, the varnish kind of aged over time. But I wanted to get into the property first. And I absolutely recommend, because they also don't put every single picture, every single room on the internet, on the MLS. You can hide a lot simply by omitting the evidence in the MLS. So you need to be in that property.

• 18:29Dave Meyer?

  Yeah, it's funny because yeah, if you have a nice turkey property, they want to show off everything. But the kind of properties you're talking about, they're showing as little as possible.

• 18:38Speaker 02

  As little as possible. One thing they did not show on the MLS were those little green bars of mouse poison all over the house.

• 18:46Dave Meyer?

  Oh, God. Wow. And this is what you like?

• 18:49Speaker 02

  Yes. Hey, that's great. I can clean that up. I can close up all the holes. I can get rid of the mice. It's an easy fix. It's just kind of gross.

• 18:56Dave Meyer?

  Yeah.

• 18:57Speaker 02

  But I don't touch meth houses, broken foundations, or mold problems because I want to be able to move in the day that I close.

• 19:06Dave Meyer?

  Yeah, because you don't want to sit on those holding costs. So when you're at that property, though, how sophisticated or finished of a plan do you have about what you're going to do? Like in your head, are you saying like, oh, I can drive up the value in the ARV by doing XYZ and you're just kind of a rough idea? Or are you like really thinking about like, here's exactly what I'm going to do, putting together a budget? Or when does that come?

• 19:29Speaker 02

  So yeah, as I'm walking, I opened the door, I walk through the house first. Just what's here? Oh, okay. There was a fire and they didn't show that part of it. Great. I'm out. I'm not touching this firehouse. Or hey, it's just really ugly. I can handle that. And then I'll go back in. Okay, there's, there's a bathroom that's $5,000. There's a bathroom that's $5,000. There's a bathroom that's $5,000. The $12,000 kitchen. I need all new flooring. Let's call that 10,000 and I'll figure it out later. The roof is in great shape or the furnace is older than me. What is this all going to cost? Okay, this needs about $75,000 worth of work. I'm getting it for 365. I know it's worth a lot more than 365.

• 20:13Speaker 02

  This makes sense to put in an offer. I'm going to put in an aggressive offer because I already have a house. I don't need to move. I want to move because I'm done with the other house.

• 20:23Dave Meyer?

  I want to give you a little more credit than you're giving yourself, Mindy. You're running the numbers. You're just doing a little bit of your own Mindy math there. But you, you, it's just because you know it well. You're not like, just like, oh, I'm buying this without a thought to what the ARV is and what you're going to put into it. But I also think that kind of speaks to the how beneficial a live-in flip is. And then it's a little bit more forgiving than I think a regular flip or even a rental property purchase because of these tax benefits, because of the timeframe that you have, it gives you a little bit more cushion. I know that if you're flipping a house, you have to really be on budget, but also be on time schedule. And so this kind of allows you to maybe be a little bit more, a little loosey goosey where you are.

• 21:07Dave Meyer?

  Ashley, did you, did you do the same thing? Or were you putting together a more detailed budget?

• 21:12Speaker 01

  I had a very detailed budget put together because originally I was just going to flip it.

• 21:16Dave Meyer?

  That's right. Yeah.

• 21:17Speaker 01

  I mean, I kind of threw that out the window because obviously when if I was doing a flip, my starting point wouldn't have been the kids' bedrooms. Like it wouldn't have been doing the bathroom with the kitchens. But so our timeline at least has definitely changed. And I think just like a huge benefit doing the live and flip is you have to pay for somewhere to live anyways. So my holding costs are completely different because I I'm paying the mortgage. I don't have to worry about if the property sits too long, me coming up with more money to cover the payment on that. So I think that's a huge benefit. But yeah, I had done a pretty detailed budget. It definitely has changed and will be changing because we are living here. So I want to make it a little bit

• 22:02Speaker 01

  more of what I would like than just doing a, you know, a six month flip and

• 22:07Dave Meyer?

  Right.

• 22:07Speaker 01

  done with it.

• 22:08Dave Meyer?

  Are you definitely going to sell after two years, Ashley? Or if, you know, if it's working for you, could you live there longer?

• 22:14Speaker 01

  Every single person in my family says that I will, they will not want to leave and that I will be changing my mind to. That just makes me more determined to find them an even better house because that's literally what they said about the last property. And we did love it so much. We kept it as a rental so that we didn't have to sell it. And I found them a better house. So that's exactly what I'm going to do. Yes, I do see myself selling it.

• 22:41Dave Meyer?

  One of the things that's sort of challenging me about planning the scope of the renovation is like, what do you do for resale value? And what do you do for your own quality of life? It's not that hard. Like, a lot of things I want to do for quality of life will also improve the resale value. But have you run into any of those challenges, Ashley?

• 22:58Speaker 01

  Yes, because Daryl said, I need to build out like this workshop in the garage and like, get all this organization done in there and all these things. I'm like, no, because that's like the stuff you're going to cabinets and things you're going to take to the next house. That's not like a priority for resale value.

• 23:17Speaker 02

  Current kitchen cabinets go in the garage.

• 23:19Speaker 01

  Yeah, that's actually a great idea.

• 23:21Speaker 02

  That's how you do. Every, every house I've ever had, except for this one, we just got rid of all the cabinets because there's no space in the garage. It's like the tightest two-car garage I've ever had. But otherwise, yeah, the cabinets go in the garage. And that's when you can tell that the house has been remodeled at least once. Oh, look, there's the original cabinets. Now there's storage in the garage.

• 23:39Dave Meyer?

  Mindy, how do you navigate that when you're sort of designing, coming up with the scope of work? How much do you prioritize resale value versus your family's quality of life while you're living there?

• 23:49Speaker 02

  I am always looking to sell the house. So I am always first and foremost, what is going to appeal to the most people?

• 23:58Dave Meyer?

  Yeah.

• 23:58Speaker 02

  I do Ikea kitchen cabinets and I choose the doors that I like, not the doors that I love and want, but the doors that I like, that I think will also appeal to a lot of people.

• 24:11Dave Meyer?

  To your point, part of it is also like, if you're waiting a couple of years, trends don't change that much. But there's sort of this like desire to renovate in a more, at least for me, in a more like timeless way than you might do if it was just a flip to be like on trend for that year. Because if you sell it in two years or three years, we might not be in this era where brass finishes are really trendy anymore. And people might be going back to the brushed. Mindy's just making faces about brass finishes. So maybe everyone agrees, and we're not going to have brass finishes in two years. And we need sort of a more timeless look as well. I don't know if that's where you're getting at, but that's kind of what maybe think of.

• 24:48Speaker 02

  Yeah, absolutely. I want the most people to walk into the house and say, ooh, I like this. And do I, I love the color pink. I would love to have a pink backsplash. I would never put a pink backsplash in a house that I was live-in flipping, because A, I don't want to replace it. And that's not going to appeal to the most people. So I have a really beautiful blue backsplash. And I have amazing gray tile floors. And they are Boring, but nice. And I think that's really what you want is boring, but nice. Trends are appealing to some people, but a more timeless look is better and a neutral

• 25:30Speaker 02

  palette. So that if they want to come in and they're like, oh, I don't like this wall color. I can change the wall color, but wow, look at that kitchen. Make it appealing to as many people as possible. Now, on the flip side, Carl and I are getting ready to tear down a rental that we have and rebuild with everything that we want. I have a bigger kitchen than what was normal. I have an island in my kitchen that's going to be five feet by eight feet, and I cannot wait.

• 26:00Dave Meyer?

  Wait, so this is your next house. This is, so you're doing a live-in flip. When you sell the live-in flip, you're going to move into this new build?

• 26:07Speaker 02

  Yes. This is our forever home. After 10, I'm getting a little old and a little tired to keep doing this live-in flipping. It, because we're doing all the work ourselves, it is a real strain, you know, mentally and physically. And I just don't want to live in a construction zone anymore.

• 26:22Dave Meyer?

  And talking about living in a construction zone, I want to talk about sort of the ways, you know, I cheated Mindy and listened to your podcast, so I know some of them. But I want to talk about some of the ways that you can make a live-in flip manageable and easier on yourself and your family. We do have to take another quick break, though. We'll be right back. For my wife's birthday, I wanted to make her a new website for her landscape design business. So I researched a lot of different options. I tried out a couple, but honestly, it was really overwhelming. It was pretty time consuming, and still, the site wasn't coming out the way I wanted it to. Then I tried Hostinger, and everything was super simple. I asked Hostinger's AI to build a clean site for her business, and

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• 31:26Dave Meyer?

  Welcome back to the BiggerPockets Podcast. I'm here with Mindy and Ashley talking about the live-in flip. Obviously, there's so many upsides to the live-in flip. The downside is just inconvenience, it seems to me. Like, I can't really think of many other downsides. It's relatively low risk. There's these tax-free gains. There's, it's just a little very forgiving. So Mindy, tell me a little bit about how you mitigate the inconveniences for yourself.

• 31:52Speaker 02

  Step number one is if you're doing this with your family, make a comfortable place for them to be able to retreat to and also make a comfortable place for you to retreat to. So we have sometimes lived in one of the kids' bedrooms while we're rehabbing the master bedroom, but we don't rehab all the bedrooms at once and sleep in the living room, which also has no drywall and it's the middle of winter and freezing cold. We always have a space that we can retreat to and that's really, really important because every once in a while, your spirit will break. And if I can talk you out of a live and flip, then live and flipping is not for you.

• 32:30Dave Meyer?

  Your spirit breaking is yeah, that's maybe the ultimate inconvenience.

• 32:34Speaker 02

  Do you remember that time that it rained in my house because we had a thousand year rainstorm and I had a four month old baby and there was one spot right in the middle of the bed that I could put her and she wouldn't get rained on as we're running around the house all night long, carrying buckets of water into the bathtub to dump it out and then go put the bucket back because it was raining in the house? That was a spirit breaking moment.

• 33:00Dave Meyer?

  You're not really selling it right now, Mindy. You're really just.

• 33:03Speaker 02

  My kids would love that, rain in the house, running around, whoop and slide across the kitchen floor. So Dave, you're in Seattle. Don't rip the roof off during the rainy season.

• 33:15Dave Meyer?

  Yeah, that's a good point. So I like that tip of sort of creating a space that people can retreat to. Actually, it sounds like you, you know, did your kids' rooms first, which makes a lot of sense. Was there anything else you did ahead of time to try and minimize any inconvenience?

• 33:31Speaker 01

  Not really. The kids were really excited about it. Like, we actually had another property we were going to move into and we kind of let them pick. It was a rental I'd had for a long time and they chose this one and I'm so glad they made that decision because I like it a lot better now than the other one, just looking back or like, why would you ever decide? So like just including them into the decision. I think was like a big part of it too. And like,

• 33:55Dave Meyer?

  Yeah.

• 33:55Speaker 01

  Oh, cool. They got to pick between houses. Like, how many kids have that option?

• 33:59Dave Meyer?

  Yeah.

• 34:00Speaker 01

  And we made the pros and cons with them. I love that you're including them. Yeah.

• 34:05Dave Meyer?

  That's good. That's good for them. So, okay, I wanna, I wanna turn the conversation one more time just to some, some practical things here for the audience. Let's talk a little bit about financing, because there's a lot of different ways that you can go about this. Like, for example, I, my property is not in such bad shape. So I'm able to get a conventional mortgage on it. Ashley, it sounds like you bought it with private money. Now you're doing a bunch of different things and you're sort of taking a refinance approach. And I assume you're gonna use the money you pull out of the refi to fund the rest of the rehab? Is that's kind of how you're doing it?

• 34:38Speaker 01

  Yeah. So the two advantages to this is that, one, we got to have an appraisal done. So with the work we did, we kind of saw where we stood as far as current comps or whatever. Um, we also got to see like, what kind of hurt our appraisal compared to the other properties? You know, you look at an appraisal report and it gives you the comparables and it says like, $20,000 was taken off in value because you don't have this that other properties had. Like, one thing that really stood out to us is like, on the first floor is the master suite, but there's no other bathroom. You either have to go upstairs or down in the basement.

• 35:15Dave Meyer?

  That's a pain.

• 35:15Speaker 01

  So that, and they actually, to the appraiser, took value off of ours because of that. And it was like, under the category of like, layout or something that was different than all the other comparables. So it was just really cool to, to see that by having an appraisal done when we're just kind of like, partial way through the process. But the other thing we did was, we did, um, an ARM loan. So it's a five-year, so we actually got a lower interest rate than if we would have done a 30-year rate fixed loan because, and since we plan on leaving in two years, we don't even need to go to that five-year mark hopefully, because it will sell. So that was another big advantage is we could take that opportunity and get a, a better interest rate too, over the next two years.

• 35:59Dave Meyer?

  I did the same thing. I did an ARM also. I think people don't like adjustable rate mortgages. And they do come with risk, but for projects like this, I think they make a ton of sense, especially now. I don't know about you, but the spread. For me, it was like a full percentage point, I think.

• 36:12Speaker 01

  Yeah.

• 36:12Dave Meyer?

  It was like between a 30-year fix and an ARM. And that matters a lot when you're holding on to it for two years. It will really make a difference.

• 36:19Speaker 01

  And you're still getting the 30-year amortization.

• 36:22Dave Meyer?

  Yeah.

• 36:23Speaker 01

  Your payment is still spread out over 30 years.

• 36:25Dave Meyer?

  Yeah, it works pretty well. What about you, Mindy? How have you financed? And do you have any recommendations for financing? Because I think, I guess the question is, right? Like, the acquisition is one thing, but then you also have to pay for the renovations. I'm doing conventional and then I'm just going to come out of pocket for the renovations. But how have you done in the past, Mindy?

• 36:45Speaker 02

  I have always gotten either a conventional or an FHA loan. And I tell my lender that I'm open to both so that they will run the numbers on both. Sometimes an FHA is better, sometimes a conventional is better. FHA is not just for first-time homebuyers. So even though I've done this a bunch, I was, the last house I had was an FHA loan. I like 30-year loans, not 15-year loans, because I don't know how long it's going to take me. And I have been looking for my forever home for a long time. I've moved around a lot. I've never in my life lived in a house for longer than six years.

• 37:20Dave Meyer?

  But now you're building it. Now you're gonna have to.

• 37:22Speaker 02

  Now I'm building it. I'm going to build my forever home. For that one, we're actually financing it through a line of credit loan against our after-tax stock portfolio, which also comes with risks. But we are aware of the risks and we are willing to take them. I think the rate there is like 4% right now.

• 37:43Dave Meyer?

  Okay.

• 37:43Speaker 02

  That's what we're paying on the, on the loan.

• 37:45Dave Meyer?

  That's really good.

• 37:46Speaker 02

  Yeah, it's really good. But there's also, it's adjustable every month. And the amount that I can borrow fluctuates with my stock prices.

• 37:55Speaker 01

  Another option too, along those lines, is if you have an investment property already, like a rental is getting a commercial line of credit. On the rental property too. And that's what we actually are going to use to do our rehab too. So I don't think what we're pulling back out right now is going to cover the whole cost of the rehab. So we'll just use our line of credit, either pay it off over time, the next few years, or we'll just pay the interest on it and then pay it from our, when we sell the property.

• 38:24Speaker 02

  But Dave, you asked about how am I financing the rehab? Here's a fun little trick. Open up a Home Depot or Lowe's or both credit card that is, the store credit card will frequently offer you no interest for six, 12, 18, or 24 months, so long as you are paying the monthly minimum on time every month. The no interest comes with an asterisk. If you don't pay off the entire amount before the promotional period ends, they go back to the very beginning and charge you interest on the entire amount for the whole time. So if you can't pay it off before the end of the promotional period, make other plans.

• 39:06Speaker 02

  But like you, you're coming out of pocket. Well, why come out of pocket now when you can come out of pocket over the course of 24 months?

• 39:13Dave Meyer?

  All right. Well, that's very good advice. So last question here, I think this has been a super, super helpful conversation. I think one question I'm imagining our audience might have is, this is a great strategy. So is house hacking. Two different owner occupied strategies. Ashley, how would you suggest to the audience, thinking through if either of these are right? And, and between these two options, like who is living flipping good for? And who is house hacking good for?

• 39:41Speaker 01

  I would say personality plays a big part in this.

• 39:45Dave Meyer?

  Yeah.

• 39:45Speaker 01

  When someone comes knocking at my door, I am hiding, pretending I am not home. So house hacking would not be for me because of those reasons. But I think personality plays a lot into it. And then your, your tolerance of rehab. And then also your, your spouse or your significant other as to their preference is living in a rehab and DIYing it yourself going to cause a lot more arguments. And then also just your kids too, as to how will they acclimate into living there?

• 40:19Dave Meyer?

  I agree. The personality thing makes a big difference. How would you think this through, Mindy?

• 40:23Speaker 02

  I would say the same thing and add on, live and flipping is great for people who have a project manager mentality. And can go with the flow because there is definitely going to be things that do not happen on the timeline that you have in your head. Even after 10, I still have a timeline and then life is like, oh, really? No, the biggest shift to our timeline for this house was COVID. We were going to be all done in May of 2020. And then March of 2020 happened and we had to homeschool our kids instead. And it has just been really dragged out. So being able to tolerate a rehab for a long period of time. Because you, I don't know if you've ever had this experience, Dave or Ashley, but you call up

• 41:06Speaker 02

  a contractor and they say, I'll be there on Tuesday, but they didn't tell you that it was Tuesday of 37 weeks from now, or they just never answer the phone again. So there's a lot of things that that happen to your timeline that are outside of your control. And if you can't handle that, then live and flipping is not for you.

• 41:25Dave Meyer?

  Those are good points. The only thing I'll add to this too, is I just think where you are in your investing journey will matter too. Like if you're prioritizing cash flow or appreciation, like obviously a live and flip isn't going to give you any cash flow. And so if you're in a point where you're trying to build cash flow, house hacking might be the option. The other thing is, I think generally speaking, house hacking is probably going to be a lower capital investment. You know, not all live and flips, you can get conventional loans for some of them you can, but if you do a turnkey house hack, you know, if you're putting five, 10% down, you're not doing a major rehab, you could probably get into that a little easier than if you need to fund a down payment and find a way to fund renovation.

• 42:09Dave Meyer?

  Even if you borrow, that's still money, like you need to still figure that out. So just another thing to think about, but I'm super excited about this. I'll keep you guys posted because I, yeah, I'm starting next week and would love to hear Ashley and Mindy, how the rest of your live and flips go over the course of your hold period here. Thank you both so much for being here.

• 42:29Speaker 02

  Yeah, thank you for having us.

• 42:30Dave Meyer?

  And thank you, Mindy. Appreciate it.

• 42:32Speaker 02

  Yeah, thanks for having me, Dave. And any questions, hit me up. I love to talk about this stuff.

• 42:36Dave Meyer?

  Yes, don't ask me any questions because I don't know yet. Ask Mindy, she knows everything.

• 42:42Dave Meyer?

  Well, thank you all so much for listening to this episode of the BiggerPockets Podcast. We'll see you next time.

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