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The Owner-Occupant Plan

Jun 18, 2018 / Fix and Flip

So you’re in need of money to purchase a house to fix and flip. Borrowing money is often fairly costly. You can have high interest rates, need to pay about ten percent as your down payment, and often have a balloon payment to deal with. If you buy a home that you plan to occupy, though, you’ll find that you do get some breaks. Purchasing real estate or a house as your second home has extra costs. That’s why going the owner-occupant route is often a better deal.

The Loan

Owner-occupied housing is the legal term for most property purchases. It simply means that the owner is planning on living in the home they’re buying. You can often get these mortgages for a low down payment, so you don’t have to have a lot of money upfront. Interest rates vary, of course, but you can usually get low rates. When you sell the home, you also don’t have to worry about being hit with as many taxes as you would if you were selling an investment property since capital gains taxes don’t apply.

What Does this Involve?

The only real difference between fixing a property and fixing an owner-occupied property is that you’ll live in the home. This might sound horrible at first—you’ll basically be living on your job site! The good news, though, is that it also means you can sell your current home or give notice at your apartment. If you have a house to sell, that influx of cash can be used to finance the renovations and get them done quickly.

Even if you don’t have a house to sell, you’ll often find that fixing and flipping the house you’re living in has a number of advantages. First, you can keep your day job so you have steady income. Second, you can work on the property whenever you have some spare time. You can put in an hour’s work after you get home without factoring in the time it takes to drive to the property. All of your tools will be in one place, too.

In the end, you can sell the property, avoid capital gains taxes, and move on to your next home to flip.