How I Turned $9,000 into My Dream Home By "Level-Up" Investing

Can you afford your “dream house” right now? The one with the pool and the ocean views, space for the kids to run around, and a huge pantry. The secret nobody will tell you: you CAN afford your dream house right now—or at least you can afford the investment that will get you there. Just ask James Dainard, who took a $175,000 hoarder condo and turned it into what would eventually become his $8,500,000 dream house. You can do the same using his level-up strategy. James only started with $9,000, which turned into multiple millions over the next fifteen years. He would buy a house, fix it, and trade it up for a better one, repeating this strategy five times until he reached the goal: a 9,000-square-foot luxury home in one of the priciest markets in America, Scottsdale, Arizona. He made millions of dollars completely tax-free because of this live-in flip strategy that ANYONE can use to massively multiply their wealth and take them to their dream home. And maybe you don’t want an $8,500,000 mansion—that’s fine! It only took James three house flips to get into “dream home territory,” and you can do the same! In This Episode We Cover: How to use the live-in flip strategy to make tax-free millions and buy your dream home Why buying the worst house in the best neighborhood can make you rich Why your primary residence IS an investment…if you use it the right way The real estate tax cheat code that lets homeowners make $500K in tax-free profits How to renovate a home even if you have zero flipping or construction experience Why it’s crucial to find a spouse who’s DTF (down to flip) And So Much More! Links from the Show Join BiggerPockets for FREE Let Us Know What You Thought of the Show! Ask Your Question on the BiggerPockets Forums BiggerPockets YouTube Apply to Be a Podcast Guest James’ Live-in Flip Story! Watch the Trailer for Million Dollar Zombie Flips! Try REsimpli, The Only All-In-One Real Estate Investor CRM Software That Helps You Manage Data, Marketing, Sales, and Operations Find Investor-friendly Tax and Financial Experts Grab James’ New Book, “The House Flipping Framework” Sign Up for the BiggerPocket Real Estate Newsletter Find Investor-Friendly Lenders Is a Live In Flip Right for You? Here’s How to Tell Connect with James Connect with Dave (00:00) Intro (03:57) Best Investment? YOUR House! (07:41) House 1 ($175K Condo) (12:05) Pay NO Taxes on Profit! (14:06) House 2 ($235K) (19:09) House 3 ($890K) (22:04) House 4 ($1.7M) (26:22) Making $1.2M on ONE House!? (28:10) House 5 ($8.5M Dream House!) (31:44) Tips for 1st Live-in Flip Check out more resources from this show on BiggerPockets.com and https://www.biggerpockets.com/blog/real-estate-1089 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?

  From a 1,000 square foot condo to a 9,000 square foot luxury home in just five steps. Today, we're talking about how to add value to your house so you can trade up into the home your family dreams about without having to spend your savings.

• 0:20Dave Meyer?

  Hi friends, Dave Meyer here for another episode of the BiggerPockets Podcast where we teach you how to achieve financial freedom through real estate. I've got James Dainard on the show with me here today, and if you've heard James on the show before, you know he's all about value add, renovating homes to increase their price and sell them at a profit. But James hasn't only added value on the thousands of homes he's flipped as investment properties during his investing career, he's also done it on the homes he's owned and lived in. And you probably hear me say this all the time on the show, but your primary home is an investment. And if you agree with me on that, then don't you want to make it the best investment possible? That's what James has done, and it's allowed him to make money each time he's sold his

• 1:04Dave Meyer?

  primary home, sometimes making over a million dollars on a single transaction. And he's used that money to level up from that 1,000 square foot condo I mentioned into an amazing 9,000 square foot home he lives in right now. It only took him 15 years, and if you want to check it out, you should go look at his Instagram, it's pretty crazy. But I wanted to have James on the show because, let's be honest, you don't need to be a professional home flipper, you don't need to have a 9,000 square foot home, or even an ambition to have that kind of home. You can do this at pretty much any level. Today, he's going to tell us how to buy your primary home like an investor. That's the most important thing. You need to think about the most efficient ways to add value while you're living in

• 1:46Dave Meyer?

  it, and how to leverage the incredible tax benefits live-in flips can create. Let's bring on James. James, welcome back to the show.

• 1:55Speaker 01

  Always like being here and this is actually one of my favorite things to talk about.

• 1:59Dave Meyer?

  I love this topic. You put out such a cool social media post about this and I was eager to just have you on to explain it. You've been on the show a million times, of course, but maybe for people who don't know you, just give us a little bit of background about your history as an investor.

• 2:15Speaker 01

  So I've been a full-time real estate investor since 2005. We've now been involved in over 4,000 real estate flip transactions.

• 2:25Dave Meyer?

  Unbelievable.

• 2:26Speaker 01

  And typically, we're running 20, 30 flips at a time. We're building homes. Anything that we can get a deal on and we can create value on, we are all over. So from apartments to flips to development.

• 2:37Dave Meyer?

  You're obviously truly one of the best flippers in the entire world and we're excited to have you on to tell us a little bit about how you've done that with your primary residence. But I also wanted to give you a shout out, man. If it's cool that we talk about it, that you are being recognized and now have a flipping TV show on A and E, right? Tell us about it.

• 2:58Speaker 01

  Yeah, it comes out March 1st on A and E. It's Million Dollar Zombie Flips where me and my team, we are out there looking for the worst of the worst and creating luxury million dollar houses. And the cool thing is, we featured a lot of brand new investors that would pitch us their deals. And whether they could execute or not, we either will buy it off them or we'll fund them on their entire project and help them through that process to create a million dollar home.

• 3:26Dave Meyer?

  Oh, cool. Awesome. What a great concept. And if you haven't met James or know his team, they're also awesome. So this is going to be a very fun project, a great group of people. Super excited to check it out, James. So where can people watch it?

• 3:41Speaker 01

  They can watch it March 1st, 10 a.m. on A and E, Million Dollar Zombie Flips. Check it out. We have a great time. We're real flippers, so you get to see the real action.

• 3:51Dave Meyer?

  Everyone, make sure to check that out on A and E, Million Dollar Zombie Flip. All right. Well, let's talk about it because you know what we're talking about here today is flipping, but sort of your primary residence. So you know, tell us about how you've used your primary residence to build wealth over the course of your career.

• 4:11Speaker 01

  The primary residence is one of the best ways that you can excel in life because you get a tax benefit. If you buy a property and you create equity or you gain equity to where if you're married after two years, you can sell your house and take the first $500,000 in equity gain tax free. And if you're single, you can make $250,000 tax free. And as a flipper, we are very taxed. You know, I typically am paying 40% on my income on everything that I make. And so to be able to make 250,000 to $500,000 tax free is a huge benefit because it allows you to trade up with the extra money that you're making.

• 4:54Speaker 01

  And so we've now done this. We are on our sixth house.

• 4:57Dave Meyer?

  Wow.

• 4:57Speaker 01

  And I will say the house that we bought, I never thought I'd be living in. And it's all because of the live and flip process.

• 5:06Dave Meyer?

  You said something that your primary residence could be one of the best investments that you make. But there are a lot of very famous, very prominent real estate investors and real estate investor educators who say the opposite, right? You hear Grant Cardone saying that your house is not an investment. I know, you know, Robert Kiyosaki has said that your house is a liability. It sounds like you disagree. Can you explain why? Like the tax is one thing, but like it just seems like there's sort of a philosophical difference.

• 5:33Speaker 01

  100% disagree with them. And I know they're smart people, but they're wrong. And the math will tell you that it's wrong, right? So like, for example, their whole premise is that you can rent a lot cheaper than own and then take that money and invest it elsewhere. So let's say on a house, I could buy a house with my process, which is to buy it, fix it up and create equity and then sell it in two years tax free. If I'm selling a property and I'm making $500,000 tax free, that means I'm saving close to $180,000 in tax. Taxes on that house.

• 6:07Dave Meyer?

  It's unbelievable.

• 6:08Speaker 01

  The reason they're wrong.

• 6:09Dave Meyer?

  Yeah.

• 6:10Speaker 01

  Is because if I pay five grand a month for that house as a mortgage, which is a liability, and I could rent it 2,500, well, that's going to cost me about 27, 28,000 dollars a year. That's 56,000 dollars after two years, but I'm making 180,000 dollars tax free.

• 6:29Dave Meyer?

  Yeah.

• 6:29Speaker 01

  So they're just wrong on this. If you're going out and buying turnkey, you have a little bit of an argument there like, hey, can you invest it still invest in assets, have a lower liability? That makes sense, but if you can create that equity, they are wrong and I will prove it to them over and over again.

• 6:46Dave Meyer?

  Yeah, I agree. I think that it's a spectrum, right? They're probably correct. If you're going out and stretching and buying the dream house, turnkey, buying new construction and moving in and, you know, like those kinds of things. It is a trade off. It's a choice. Like you can make your primary residence a good investment if you want to prioritize that. Some people don't. Some people just want to buy their dream house. But if you're listening to this podcast, I'm guessing you want to turn a profit on every real estate transaction that you do. And I 100% agree with James, whether you're house hacking or doing a live in flip, you can absolutely make your primary residence a good investment. And we've talked a ton on the show about house hacking.

• 7:30Dave Meyer?

  So I'm eager to hear from you just sort of the nuts and bolts and logistics of how you've done the live in flip model six different times now to build wealth. Can we just start at the first deal and you tell us where were you at at that point in your life? And what did you buy?

• 7:47Speaker 01

  Okay, so the first house that that started the whole process, I was actually single then too. I wasn't married, so I didn't have up to 500,000 I could gain. I bought the property in 2006. I was 23 years old. I was working in real estate and the issue I was having is I didn't qualify for a big mortgage. I couldn't buy a lot of expensive things because of my income and what I was making. And so what I ended up buying was a condo in Bellevue in Washington, which was a hoarder condo and it was packed. It was. It needed a ton of work, but I was able to buy this property from a seller because he was moving his wife out of there. They were going to sell it and we paid one hundred and seventy five thousand for this condo.

• 8:27Dave Meyer?

  Pretty good for Bellevue thinking about it now.

• 8:30Speaker 01

  Now I wish maybe would have kept it, but it had a purpose to get me into my next house.

• 8:33Dave Meyer?

  Yeah, right.

• 8:34Speaker 01

  So, you know, we were paying one seventy five. We had to put about fifty thousand into the renovation.

• 8:39Dave Meyer?

  Okay.

• 8:39Speaker 01

  Uh, with new cabinets, flooring, doors, trim, adding a bathroom. And then it was worth about three twenty five to three fifty. You know, that's a long time ago. It's almost twenty years.

• 8:48Dave Meyer?

  Yeah, yeah, but still. So you're looking at a hundred, hundred and twenty five grand spread there.

• 8:54Speaker 01

  Yeah. So by the time I was done renovating, I had created the hundred and twenty five thousand dollar spread.

• 8:59Dave Meyer?

  And were you actually living in it or were you sort of like you bought it as a primary, you're renting or something and renovating it on the side and then you moved in?

• 9:07Speaker 01

  I was living in someone else's house hack at the time, renting a room from someone that had bought it. My business partner, Will. And so, once I was renovated, I moved in and how I could afford it was it was a house hack too. Because I rented out a room for seven hundred and fifty bucks a month. It covered half my mortgage and I was doing pretty well because I'd made over a hundred and twenty five thousand dollars in equity and I was paying

• 9:27Dave Meyer?

  Amazing.

• 9:27Speaker 01

  The same as what I was paying for that room down the road. So it made a big first impact, but then with the market appreciation, it created more equity.

• 9:36Dave Meyer?

  I guess just philosophically at that point in your life, maybe there's, this is one of the benefits of, of starting at twenty three, right? But like you weren't trying to buy your dream house. You saw this as an investment, right?

• 9:47Speaker 01

  Yes, I wanted to own my own property and so I had to work with what I had to afford. But even back then, I was like, I want to live on the water one day. Randomly, I live in the desert now. But, but that was my goal. It's like, I want to get to a waterfront house, but there's no way I was ever going to be able to afford that. And so that was kind of my goal was to buy this as my starting point, save money on my rent and then really start moving down the road.

• 10:09Dave Meyer?

  Well, that's awesome. I mean, I think that's such an important thing here because having that sort of long-term dream and plan makes it kind of fun, right? Like you see it as like a stepping stone and an option of like trading out and constantly moving up. And I know people don't want to move that much, but like when You have this long-term mentality. You have a choice, right? You could look at a property on the water and be like, I'm never gonna be able to afford that. Or just kind of dream like, oh, one day I'll get there. Or you can sort of like back into how many times you need to do this live-in flip concept to get there. That's super cool. So did you live in it for exactly two years or how long did you stay?

• 10:48Speaker 01

  That one I lived in about two and a half years and I ended up selling it for $450,000.

• 10:56Dave Meyer?

  Oh damn, that is awesome. I mean, you more than doubled your equity there, huh?

• 11:00Speaker 01

  Yes, we more than doubled the equity and then that's where the spark went off. I was like, okay, wow, I gotta use this now.

• 11:05Dave Meyer?

  I bet the spark went off. You made 200 grand on your first live-in flip. It's a pretty good deal.

• 11:10Speaker 01

  Now, kind of what happened from there, I had saved the money. It was tax-free. And that was really also what got me through 2008 because then 2008 happened. And everything started getting wiped out, including me. You know, by 2007, we were actually making money. I had this money I could trade into a new house. I was looking for my next house, but then the wheels came off and we definitely were not making money for 12 to 18 months. And that became the next problem. It was hard to get a loan and it was hard to make any kind of money in real estate from 2008 to 2009.

• 11:42Dave Meyer?

  Yeah.

• 11:43Speaker 01

  The only thing that saved me was that equity that I'd made because it allowed me to look for that next property. And the key to this is every time you do it, there's a little bit of sacrifice involved.

• 11:55Dave Meyer?

  Right.

• 11:55Speaker 01

  Because you have to find the property that can create you equity, not your dream house. Because what I did know is after selling that condo, I still couldn't afford my dream house.

• 12:04Dave Meyer?

  So you mentioned something that's really important here, James, because I think when a lot of people think about flipping or buying and selling properties, like, oh, I'll just do a 1031 exchange. But you mentioned one of the benefits here of live-in flip that really isn't available in other parts of real estate, which is that you were able to sell that, get that money tax-free and then sit on it. You didn't have to reinvest it right away, which is how a 1031 exchange works. Like you have to close within 180 days and you have to identify the properties much quicker than that. And so the live-in flip, at least that I know, is really the only way that you can get that tax-free equity boost and then have the luxury of deciding when and where

• 12:47Dave Meyer?

  you want to invest it. And this is a perfect example. Like, the market changed. James wasn't ready to reinvest into another primary residence. So what'd you do? Did you rent for a little while and then buy a new house a couple of years later when you're in a better financial position?

• 13:01Speaker 01

  Yeah, I ended up moving into rental, and I've done that twice throughout this 20 years, where I sold the property, I didn't have what I wanted to trade up into, and I just moved into a rental. I sat on it until I found the next property that I could buy. And so it kind of timed out well, because I was able to kind of make it through the hard times, but then have that money sitting there. The negative thing is, I kind of got wiped out. The market was tough, couldn't make money, but then properties were a lot cheaper. And it was allowing me to then reinvest into something else. So I rented, and then I was on the hunt for my next property. And the next property I found was probably the ugliest home I've ever bought.

• 13:36Dave Meyer?

  We do have to take a quick break, but first wanted to say that this segment is brought to you by ReSimply, the all-in-one CRM built for real estate investors. Automate your marketing, skip trace for free, send direct mail, and connect with your leads all in one place. Head over to resimply.com/biggerpockets now to start your free trial and get 50% off your first month. Stay with us, we'll be right back. You know that thing where you discover a feature you wish your software had? And it turns out, it already exists, just on a different platform. Like, oh, you want rent payments processed in two days? Rent Ready does it. Oh, you want to block tenants from

• 14:17Dave Meyer?

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• 15:00Henry Washington?

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• 15:43Henry Washington?

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• 16:03Dave Meyer?

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• 17:23Dave Meyer?

  We're back on the bigger pockets podcast with James Dayner, talking about how he has live and flipped his way to his dream house. We talked about his first deal before the break and before we left, James hinted that the second house was the ugliest house he ever bought. Please tell us about this.

• 17:39Speaker 01

  You know, as your life changes, your lifestyle changes. And I had just gotten engaged with my now wife and we were looking at settling down, having some kids. So I had to find a much bigger property. Now, the problem was I didn't have the money to go buy a bigger property, couldn't afford that monthly payment. I had some cash on the sidelines because that first condo, I had to put maybe $8,000 down. I grew into over $200,000 that I now had to reinvest tax free. But for what we were trying to do, that was going to take up all my money and I wasn't going to still be able to afford that payment. So then I targeted the cheapest, ugliest thing I could find. And it was a bank owned property and it literally looked like someone glued three shoeboxes together.

• 18:24Dave Meyer?

  Wait, when there's one house or a triplex?

• 18:26Speaker 01

  It was a house, but someone had taken this like kind of 1950s row house. Then they added a section, they converted the garage, added a weird garage thing off the back. I remember taking my wife there. I'm like, I found a house that could work for us. It's in the right locations, the right size and has a big yard, had a half acre lot. And I took her there and she's like, are you kidding me? This is where you want to grow a family. And so I kind of talked to her about the month of payment, what we had to do. And it was either we had to live way further away, or if we wanted to be where we were going to be, this is really all we could afford with that down payment. And so we ended up purchasing that property using that money that we made tax free as our down payment. And we were able to get a construction loan on the property to where we could then take this property that we paid

• 19:10Speaker 01

  two hundred and thirty five thousand dollars for. This was something on market anybody could have bought. It was for sale for six months. That's how ugly it was. We put about two hundred grand into the property. And then after the market kind of rebounded, we sold it for a million dollars and made five hundred thousand dollars tax free.

• 19:28Dave Meyer?

  Oh, my God. Okay, so let's just go through those numbers again. So you bought it for two thirty five, you said?

• 19:33Speaker 01

  Two thirty five.

• 19:34Dave Meyer?

  And did you put twenty percent down? Do you remember?

• 19:37Speaker 01

  No, I had to put more down back then because the market was still risky.

• 19:40Dave Meyer?

  It was tough.

• 19:40Speaker 01

  And so I had to put twenty five percent down. It was the purchase price plus fix up. So it was like around a five hundred thousand dollar loan. So I put down one twenty five, but then I had to have money to be able to hold the property as we were repairing it.

• 19:54Dave Meyer?

  Oh, right.

• 19:55Speaker 01

  And so I barely had enough to pull this off. And that's why I was really trying to get this one done. And it took some convincing my wife, but it was all because I had done that first linen flip.

• 20:06Dave Meyer?

  You had enough money, right? Because you said you cleared like two hundred grand on that first one.

• 20:10Speaker 01

  Yes, I barely had enough money. I had to get it renovated a certain amount of time or I would have been burning. I had to rent during that time, too. We couldn't move in.

• 20:17Dave Meyer?

  Oh, yeah. So you're double expenses.

• 20:19Speaker 01

  Double expenses. I have a funny story about that when I made the next trade because I couldn't afford both. So I went into my mom's basement. But it made a huge difference having that capital. Because over two years, we went from making two fifty on the first one to the second one, we made five hundred thousand dollars tax free when we sold it.

• 20:38Dave Meyer?

  So your wife was probably pretty happy after that, I would imagine, despite living in the ugly house.

• 20:44Speaker 01

  You know what? But we made it beautiful. I definitely learned a lot about construction from that house alone. And it became a million dollar property. And at that point in my life, I never thought I'd own anything that was worth a million bucks. Not when I bought that condo.

• 20:56Dave Meyer?

  Right.

• 20:56Speaker 01

  Right? Like I bought that condo and you're thinking a million dollars. You gotta be rich to buy that. And what I realize is you don't have to be rich. You just have to put the puzzle together.

• 21:05Dave Meyer?

  So, well, I want to hear about the, the rest of these deals, but I just want to ask for like normal people who haven't done 4,000 flips. Like, is the scope of what you did in these projects, things that regular or newer investors could pull off?

• 21:20Speaker 01

  I had never flipped a property ever when I bought that condo.

• 21:23Dave Meyer?

  Right.

• 21:24Speaker 01

  You know, and that's why I started with something a little simpler, but it was still gross. But it was manageable. And you know, you have to do what you have to do. Like on that property, I remember I was painting some walls. I was helping take the garbage out when I bought it. You do what you need to do to get into that first property. The second one, I had only flipped maybe 60 houses before this and never have wanted this size.

• 21:47Dave Meyer?

  Okay.

• 21:48Speaker 01

  So it was about finding the right contractor and it took me a long time. I had to meet like 10 different contractors. I found the guy. And we had to be thrifty though, to get it done for that price too. I was out like looking at every clearance shop, whatever I could get a deal on, you know? So you have to scrap your way in to the equity position, but it is doable.

• 22:06Dave Meyer?

  Absolutely. I love how you say just 60 flips. That would be like a career for most people. But for you, 60 flips is modest.

• 22:14Speaker 01

  But you know, a lot of those flips were very easy back then too. Like I had never done one like this, that second one.

• 22:20Dave Meyer?

  Yeah.

• 22:20Speaker 01

  This was, this is what I can afford. I can swing and I got to figure it out. It was definitely a tough, challenging project.

• 22:26Dave Meyer?

  So I imagine, you know, you made 500 grand off this. You're probably thinking, I just got married. Now is it time to buy a dream house? Or what'd you do after this?

• 22:35Speaker 01

  And this is where I did get into a dream house scenario.

• 22:40Dave Meyer?

  Nice. You deserve it.

• 22:42Speaker 01

  My wife actually was like, I really want this property. I'm like, honestly, I didn't really want to sell that house because I'm like, we have all this equity. My mortgage payment on that house was $1,800 a month.

• 22:51Dave Meyer?

  Unbelievable.

• 22:52Speaker 01

  I'm like, we could just stay here forever. We're fine.

• 22:54Dave Meyer?

  Yeah.

• 22:54Speaker 01

  But what we were able to do with that 500 grand is then we ended up buying our house in Bridle Trails, where we paid $890,000 for a 5,000 square foot house that was completely dated and had been overrun. And you know, there was kind of two things you could do on that. Property, you could do more cosmetic, but then you weren't going to create that 500,000 or you could go full mill deal on the thing. And so we paid 890,000 and then we invested a million dollars into this renovation.

• 23:24Dave Meyer?

  Wow.

• 23:24Speaker 01

  This was my dream house, though. It was a northwest contemporary, beautiful home. I hired an awesome architect and it was amazing. We had kids at this point. This is where it got a little tricky, though, because we went for another big jump. And this was beautiful properties, Bellevue, Washington acre lot. I wanted privacy. I wanted a big yard for my kids to play in, have kids over. But that was stretching us at the time. Because again, my mortgage payment was $1,800 a month. And now I was buying this property that I had to fix up for nine months. And so what we did there to afford it, and this is the conversation I had with my, my wife was like, hey, we can do this, but we got to cut our monthly cost down. So we ended up moving in to my mom's basement while we renovated this

• 24:09Speaker 01

  with a two year old and a brand new baby.

• 24:12Dave Meyer?

  How big of a basement was it?

• 24:14Speaker 01

  Uh, it was, you know, it was, it was like 900 square feet. So we were, we were good, but it was rough. You know, it was tough time, but you know, for us to get us to this next level house, we had to make some sacrifices because they ate up all of our cash that we had made from our previous two houses. And we had to still make that payment while we were renovating it. But once we were done renovating it, it turned into a value of 3.25 million.

• 24:36Dave Meyer?

  What? What you put in a million? So it was 1.8, 1.9 in?

• 24:40Speaker 01

  Yes, and I ended up selling that house three years later for 3.25 million.

• 24:45Dave Meyer?

  Okay, so if I'm keeping track so far, you started with, I, I forget exactly what it was in equity. It was like a hundred grand. And then you doubled it, more than doubled it the second time around. And now this time you, you doubled it again?

• 24:59Speaker 01

  Yes, so on those three houses, we were able to make 1.25 million tax free.

• 25:06Dave Meyer?

  Tax free? Ah, that's amazing.

• 25:09Speaker 01

  And that's why Grant Cardone is wrong.

• 25:12Dave Meyer?

  Yeah. I love that, yes. I mean, yeah, you got a 1.2 million reasons, uh, why Grant Cardone is wrong there. It's an unbelievable amount of money. Cool, so I mean. At that point, I, you know, would probably relax, enjoy the amazing house that I was living in and all this money that I made. But it sounds like you kept going. So why? Were you just addicted at this point? Because you were just making so much money every time you did it?

• 25:41Speaker 01

  Yeah, I kind of was because, you know, part of it was like, we would make this money, but also, you know, we were able to reinvest some of that money into hard money, which now pays us interest. And so when we sold the house, we ended up not buying another house for about 18 months.

• 25:56Dave Meyer?

  Okay.

• 25:56Speaker 01

  Because we had taken that $1.25 million and put it into hard money. It was paying us $12,000 a month in interest.

• 26:04Dave Meyer?

  Oh, my God. Wow. And so you're just renting?

• 26:07Speaker 01

  We were just renting, living a good lifestyle, kind of splitting our times in different states. And we were trying to figure out where we want to be. And so I ended up buying another house about 18 months later, and I traded down.

• 26:18Dave Meyer?

  Mm hmm.

• 26:18Speaker 01

  It was a property in Bellevue. The reason I bought it was not the location I really wanted to be, but it had great views, could be renovated, and the value could be increased. And so I ended up paying 1.7 for that property. I put in 700 into the renovation, and then we ended up selling that one for 3.7 million.

• 26:37Dave Meyer?

  Oh, my God.

• 26:38Speaker 01

  And part of that was the pandemic pumped value up on that house. We were targeting the 500 grand. It just went up higher because of the pandemic, like everybody else.

• 26:46Dave Meyer?

  Well, that's unbelievable. And I mean, it's just another example of why the live-in flip is so valuable over the 1031. Because, yes, the timing that I talked about earlier, where you can take the money out and sort of be opportunistic, which it sounds like you did again. But the other thing is, you don't have to reinvest 100% of your profit, right? Like, you traded down. So you're able to take all that profit you made off the third one, still do this again, and take some money off the table and invest it into another asset class. Like, that's unbelievable to be able to do that. And not only are you getting your primary residence, you're diversifying at the same time. So I want to hear more about what you did next, James, but we do have to take a quick break. Before we go,

• 27:31Dave Meyer?

  I just wanted to say that if you need a financial planner who can help you get all the amazing tax benefits like James and I are talking about, we can help you find one on BiggerPockets. Just go to biggerpockets.com/taxpros to get matched with a tax professional or financial planner in your area. We'll be right back.

• 27:51Dave Meyer?

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• 33:10Dave Meyer?

  Welcome back to the BiggerPockets Podcast. Here with James Danner, talking about how he live-in flipped his way to enormous wealth, as we are learning here. James is telling us an incredible story. When we left off, James, you had flipped a property in Bellevue during the pandemic. How much did you say you walked away from with that?

• 33:29Speaker 01

  Over a million dollars on that house.

• 33:32Dave Meyer?

  In profit. So you had two in a row that were over a million dollars in profit, though?

• 33:36Speaker 01

  Yes. And part of that was we didn't go for our dream house. We went for the best possible deal we could find.

• 33:42Dave Meyer?

  But I imagine like at that price point, like you're still in a nice house, right?

• 33:45Speaker 01

  Yeah, it's a gray house. You know, we ended up selling the one in Bellevue after we had, you know, taken the time off. The reason I liked that deal better wasn't, we didn't go to the most expensive because we didn't know what our dream home was yet. So I'm trying to build up more and more cash so we can go buy that dream home. And so the great thing about that property is we paid 1.7 for it. We had gained over 1.25 million in tax regain, not counting the other gain we had made. And so I was able to put 400 grand down, but I still had about $650,000. Remaining, which was in hard money, which was paying me $6,500 a month.

• 34:25Speaker 01

  So now we bought this property, we renovated it and my entire mortgage was being paid by my hard money.

• 34:31Dave Meyer?

  That's so cool.

• 34:32Speaker 01

  And so that tax free gain allowed me to reinvest and pay myself and reinvest into a property I could create another $500,000 spread in.

• 34:40Dave Meyer?

  So yeah, it's, it's not just paying the equity gain, but it's also giving you the cash flow to play your mortgage. So you're basically living for free.

• 34:48Speaker 01

  Well, yes. And, and that's a hard spot to leave, you know, for us as lifestyle as we grew, we decided we want to be somewhere a little bit sunnier. And we ended up then buying into a Newport Beach property, but that one, we ended up pulling the eject card on and just flipping it. But able to take all the money that we had made tax free and invest it into a very big flip. We were thinking about moving into it. And then we were going to create the same equity gain. But instead we were able to afford this luxury flip that made us a crazy amount of money.

• 35:20Dave Meyer?

  Tell us about this one. I know this one just happened, right? You just sold this.

• 35:24Speaker 01

  This one just happened. And, and again, this wasn't the live in flip, but the money that we made tax free allowed us to buy this property. So we paid 5.6 million for this house in Newport Beach. We invested 1.2 million into it and we sold it for 8.5 million dollars.

• 35:42Dave Meyer?

  Wait, so you put 6.8 in and you sold it for eight, five?

• 35:46Speaker 01

  Eight, five.

• 35:47Dave Meyer?

  So you cleared 1.7?

• 35:49Speaker 01

  And not, there's cost and money and sale costs on there. So it was a 1.2 ish in there.

• 35:56Dave Meyer?

  Yeah. Okay. Wow. Is that your biggest? I mean, it sounds like you've done that more than once, but that had to be one of your biggest flips, right?

• 36:02Speaker 01

  Oh, that is the biggest flip I've ever done by far.

• 36:05Dave Meyer?

  Yeah. In one deal.

• 36:06Speaker 01

  One deal. And you know, we didn't have the cash to buy something like that either, right?

• 36:10Dave Meyer?

  Right.

• 36:10Speaker 01

  That's the thing. Just because you make more money tax free, doesn't mean you go spend it. We were really disciplined about rabbit hole in that away. Either keeping it hard money or reinvesting in another asset we could grow with construction. And that one in Newport Beach wasn't a tax free sale because we never moved into it, but it gave us the money then to buy our next house, which was in Arizona, which is definitely my wife's dream house. And I can tell you, there's no way I would ever be able to do this house if we didn't go through these steps and create this equity and gain.

• 36:43Dave Meyer?

  So that's where you're sitting right now. You're you're finally in your dream house right now, or at least your wife's dream house.

• 36:48Speaker 01

  Yes, we are finally in her dream house.

• 36:51Dave Meyer?

  All right, tell us about it because you just moved in, right? Not long ago.

• 36:54Speaker 01

  Well, yeah, we moved in in August and so now I commute. I fly up to Seattle almost every week for work and I come back and we live here and it's in Arcadia, which is a neighborhood in Scottsdale. It's a beautiful house. It's 9,000 square feet on an acre. And now my kids are 10 or 12. I can't keep moving them. We have to root in. This will be the last time I do this until they're out of high school.

• 37:18Dave Meyer?

  Yeah, that makes sense.

• 37:20Speaker 01

  And I barely made it in the nick of time to get it there because we wanted them to be rooted in a lentry school. And so we weren't chasing the best deal here, but I did still buy it below replacement costs.

• 37:32Dave Meyer?

  But obviously you still got a good deal.

• 37:34Speaker 01

  Yes, I can't not do it, but we were able to move into this house the day we bought it, which we've never been able to do. And for everyone listening, I never thought I'd be buying a house like this. I bought a condo to try to buy a nicer house. And then I bought a nicer house and I traded for a nicer house. And this is the impact. And so I'm so passionate about this. This fulfilled dreams that we never thought we were going to get. And we paid 8.5 million for this house. We were able to put a large down payment down. So we're not over leveraged to where it still makes sense. And then over time, if we invest about, I would say, seven, 800 grand into this property, there's a recent sale that just sold for 13 million.

• 38:15Dave Meyer?

  Wow. Oh, my God. Okay. So it's still got a really good deal here.

• 38:19Speaker 01

  It is. Yes, it just needs a little bit of a facelift, you know, and it might be more like a million over time, but now we're not in a hurry either. Like there's no two year clock. And so, you know, that's the beautiful thing about this, that tax savings is a Real thing. I mean, we went from a $9,000 down payment into a $3 million to $4 million down payment by just sacrificing and moving things around.

• 38:41Dave Meyer?

  Unbelievable. It's so cool. Like you said, I mean, I'm sure 20 years ago, when you started doing this, you couldn't imagine like being in an $8 million home, but it's the power of, you know, persistence and doing it and showing that real estate is just a long game, right? You just keep doing it over a long enough time. Those gains are going to compound, especially if you don't lose it to taxes. If you can compound more and more money, like the, the math is just incredibly beneficial.

• 39:06Speaker 01

  Yeah. And, and granted, we didn't need 9,000 square feet. That's ridiculous. It is. But the reason we kind of went towards this one is A, it was my wife's dream house, and that's what I really always wanted to accomplish. But also, it was the best value that I could find for this kind of house because the size and the price we paid, we were able to buy it below replacement costs. And so I could have bought a cheaper house that was a little bit smaller, but I would have been paying $300 more a square foot. And so again, I still went with that mindset of I need to buy value. And anytime you buy value, that's how you create value in your life.

• 39:40Dave Meyer?

  Yeah, absolutely. Well, well said. And congratulations, man. This is a super cool story. And I really think something that people can do, like I'm, I'm learning because I'm doing my first live-in flip, that this is can be, you know, a real jumping off point for me. And it is, you know, I talked to my wife about it as well. Like this isn't our, going to be our dream house, but it's going to be a super nice place to live and we're going to use it to catapult us into the next deal and maybe the next deal after that. And when you're in real estate, like, you know, I used to think like I'd buy one house and never move, but like, it's kind of fun. When you are interested in real estate and construction and these kinds of things, like, I think it's kind of enjoyable. Before we go, James, though, I want to ask, like, do you have any tips for people who are not familiar with

• 40:21Dave Meyer?

  flipping, but want to strike some balance between like having a good place to live, but also being able to generate a huge ROI like you have? Any, any thoughts or tips there?

• 40:32Speaker 01

  The first one is the one that gets you going. And so be less picky and chase the best value because like you just said, it's temporary. This is a two-year commitment. Then also, you have to find those contractors to bring out and work on your, your project. The puzzle's always solvable. That's the one thing I've learned in real estate investing, no matter if the market goes up and down, you gotta look at that puzzle. How do you solve it? And there's always a way to profit, but you might have to look at it a lot different than what everyone else is looking at.

• 41:00Dave Meyer?

  Well, James, thanks so much for coming on and sharing your personal story. It's great to hear all the success you've had and that you've finally landed in your dream house after 20 years of hard work and a lot of successful deals.

• 41:11Speaker 01

  Put in the work, guys. Hard work works.

• 41:13Dave Meyer?

  Guys, this is why A&E gave him a TV show because he knows what he's doing. So make sure to go check out Million Dollar Zombie Flips. A&E comes out March 1st. Congrats on that as well.

• 41:24Speaker 01

  Thanks, Dave.

• 41:25Dave Meyer?

  All right, and thank you all so much for listening to this episode of the BiggerPockets Podcast. We'll see you all soon.