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Old 12-03-2013, 08:10 AM   #41
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OP here again,

About the question regarding moving every couple of years, actually we like to move. We have lived in several interesting areas and met a lot of nice people. We even did a flip in a resort area. Now we are in a college town.

We do not have any clutter and keep our furnishings simple so it is easy to pack and move. A decluttered house sells much easier. We paint the walls "relocation beige".

Three of the houses we have sold we also sold with most all the furniture to the buyers of the house so we had very little to move. When we needed to buy furniture for the next houses we went to consignment stores and estate sales. We actually had made profits on the furniture we sold too.

We like the freedom that moving gives us. if there are neighbors we do not like or something about the house we do not like, we can ignore it because we know we will move in a couple of years.

If we had the perfect house or neighborhood we might be tempted to stay there and not move but it has not happened yet. We like the adventure of a new place.

Jo Ann


A question on moving..... are you staying in one place or moving around the country (or maybe region)
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Old 12-03-2013, 08:17 AM   #42
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I've known people who did this. They ended up living in a very nice house in the end through the profits they made on the fixer uppers. Wish I had the get up and go to have done this. My problem......too lazy.
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Old 12-03-2013, 10:54 AM   #43
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I would like to find a downsized house that doesn't need major work - just one that hasn't been staged, cleaned or painted lately. We came across a short sale like this awhile back when we weren't ready to move. A couple leaving the open house was commenting and calling the house a nightmare. We just looked at each other and saw dollar signs. The house was close to new, was deeply discounted and really only needed cosmetic work. It had a bunch of junk left in it from the previous owners that could easily be removed.

I hope we can find something like that again when we are in a position to buy.
My dear FIL lives in such a house (except that it is not "close to new"); my MIL died a few years ago and FIL is still in the same house where they raised their family starting back in 1955 when they bought it before it was even built. It is now 'updated' with early 1980s decor.

FIL is in his mid-80s, and he would like to see the family keep the house when the time comes, but DH's siblings aren't really interested in putting any work into it and probably will just dump the house when the time comes if, that is, the house is not sold for any of FIL's medical needs later on.

DH knows it will take a bunch of work to update it, and I've come up with some estimates and have a folder of 'fixing it up' ideas. I am rarin' to go. I think it would well worth our while to do some of these fixes before selling it, unless we want to be landlords. We could definitely live in it during remodel time, even if it's not our desired neighborhood any more, and rent out our own house.

What will have to happen is that DH and I will have to buy it from the estate and save realtor fees. We would also benefit somewhat from Prop 13. DH and I kick this around from time to time. Mostly he is inclined to let it go because it wlll take money and effort to put lipstick on FIL's nice little piggy.

However, I keep reminding him, "This is a Southern California/ Orange County pool home on 1/3 acre we're talking about here, so let's think this over verrrryyy carefully."

FIL is behind me, but no one else is!

Golftrek, I shared your original post with my DH, and I think you got his attention. I sure didn't.
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Old 12-03-2013, 11:36 AM   #44
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What will have to happen is that DH and I will have to buy it from the estate and save realtor fees. We would also benefit somewhat from Prop 13. DH and I kick this around from time to time. Mostly he is inclined to let it go because it wlll take money and effort to put lipstick on FIL's nice little piggy.
Prop 13 definitely adds a layer to complexity to house planning and succession. Prop 13 is like the golden handcuffs of housing for people that bought in CA years ago. We would like a smaller house to take care of but keeping the big house and letting the kids inherit the Prop 13 tax base is certainly something we have to consider.
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Old 12-03-2013, 01:12 PM   #45
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....I've always read/heard people say kitchen and baths but kitchens can get real expensive, especially if cabinets are involved. ...
If the kitchen layout and the guts of the cabinets are ok, then you can simply remove the doors, refinish the framing and replace the doors and save a lot of $$$. Or if the layout and cabinets are ok, sometime just refinishing the frames, doors and drawers will work at even more savings.

If you start changing the layout, you might be able to reuse the cabinets if they are still in good shape. In our new house, we reused our kitchen cabinets (which were only a few years old) and were able to buy some additional cabinets from the same manufacturer to complete the new layout. Saved us a lot.
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Old 12-03-2013, 01:20 PM   #46
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In our kitchen we put in new countertops, a stainless steel sink and will put in new floors and just paint the cabinets as they are. I don't think the ROI is there on a $50K kitchen remodel including replacing all the cabinets, though some of our neighbors do this. A different kitchen layout just isn't that big a deal to me. I'd rather have the money to invest. The houses in our neighborhood with more open kitchen layouts just don't sell for $40K more per house.
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Old 12-03-2013, 04:28 PM   #47
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Might be hard to duplicate. 2010 was the very bottom of the real estate market. Prices are up and the number of investors is up which makes finding good investment properties much more difficult. You do have the advantage of being an owner occupant which gives might let you bid on some houses ahead of investors but I still wouldn't expect to find many $100k flips the next time.
I agree...
It's almost as if someone turned the investor rock over and all of these investors came crawling out again. I know a few who ran to Maui thinking they could score something...I know I was originally thinking that.

I have bought and sold a couple pieces of real-estate as described and it does help shelter the tax benefits.

I fully intend to do this maybe 4-5more times in my life and hopefully begin paying cash. I stay away from the 30k properties and go for the middle-income first-time home buyer types.



PS...right before I sold my last property I was gearing up to gut the kitchen as I had some cheap labor / supplies. In hindsight I doubt I would have realized a 10% ROI afterwards... not in the neighborhood it was in. I shoot for 10%+ ROI on anything I spend effort on. Buying property, investing in index, increasing salary...aim high! After commissions I had 15.5% ROI on my last place...but it took some minor operating costs as well and it's hard to keep track of all the little things you put money into and the time it takes to manage.
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Old 12-03-2013, 04:44 PM   #48
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Last year, my daughter and I fixed up a local house we bought out of an estate for back taxes (lots of them!) and fixed it up and flipped it. It took us all year (part time of course). New roof, siding, inside and outside paint, tile floors, carpet, three new doors, three new windows, a security fence, two sinks, three toilets, etc. We made ~40% over costs.

It's a lot of work. You need time and good help.
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Old 12-03-2013, 05:04 PM   #49
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Original OP here,

On the remodeling issue, we try to buy a house that does not need MAJOR work. My best advice is PAINT PAINT PAINT. Paint everything a neutral color, we have found a color we like and use it every time. the paint is Sherwin Williams Sawyers Fence, we call it "Relocation Beige".

Regarding the kitchen, we always keep the same layout, too expensive to do a total tearout. We usually buy new appliances. If there is no dishwasher you need to add one (take it from me no woman will look at it without a dishwasher!). If at all possible, keep the cabinets, cabinets are expensive. We usually paint them. Someone else mentioned getting new doors.

We usually put in new countertops, but do not overprice for the neighborhood. If most houses in the neighborhood do not have granite, use a good laminate. We also usually put laminate on the kitchen floor.

On the bathroom, we always buy a house with at least 2 bathrooms. It is too expensive to add a bath. We try to leave the bathroom layout the same and just paint, put in new fixtures and floor. My husband can lay tile.

We spend extra money on the front of the house. We try to brighten up the entry, we usually have a brightly painted front door (the last house had a burgundy door). We also spend some money on the front yard landscaping for curb appeal. We don't worry so much about the back yard. Right before we list for sale we buy colorful plants and flowers for the front.

When we are ready to sell, we go ahead and get an inspection done and fix whatever needs fixing. Then we advertise that fact of the inspection and fix ups. This saves the buyer money and you avoid having the inspection come up as an issue. Of course the buyer could always get it reinspected, but most do not.

We also stage the house for sale. We try to make it look like a model home.
We depersonalize and declutter. We used a real estate agent to sell the last house. We did a lot of research to choose the right agent. Then we left the house and stayed in our motorhome.

We live in North Carolina, and all our houses have been in NC, don't know anything about California real estate. Most of our houses were in the same city we had lived most of our lives in. The next to last house was in a mountain resort, we got stuck with that house an extra couple of years in the crash, but it was a nice place to live, on a golf course and we came out OK.

The last house, a foreclosure, was in a different area of the state where we wanted to live, a college town. We like it here and we are looking for another place here.

Except for the house that we owned in 2008, none of the houses have taken more than a few weeks to sell.

Jo Ann
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Old 12-03-2013, 06:33 PM   #50
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My hat is off to you. I admire people that can fix up houses. I am currently living in a house that need major remodeling. I have to say that my DH and myself do not have good taste. We have tried to do a few things and do not like the results a short time later. I simply get overwhelmed and have no idea how to get started. This usually ends up with nothing getting done. I desperately need the lady on Love It or List It to come to our house!
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Old 12-04-2013, 09:04 AM   #51
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If the kitchen layout and the guts of the cabinets are ok, then you can simply remove the doors, refinish the framing and replace the doors and save a lot of $$$. Or if the layout and cabinets are ok, sometime just refinishing the frames, doors and drawers will work at even more savings.

If you start changing the layout, you might be able to reuse the cabinets if they are still in good shape. In our new house, we reused our kitchen cabinets (which were only a few years old) and were able to buy some additional cabinets from the same manufacturer to complete the new layout. Saved us a lot.
Plan to keep the layout.

These cabinets are old. Probably original cabinets from the late 70s. The upper cabinets seem to be in decent shape. Lower cabinets seem to have a lot more wear. The bottom below the sink looks like some water may have damaged 'em a bit over the yrs.

I've thought about just refinishing, painting, etc. but concerned about the bottom cabinets wear. I guess it's possible to just fix the bottoms without tearing it all out?

I've actually considered Ikea as a less expensive alternative. Don't laugh
Ikea's cabinets get decent reviews online from what I've read. This isn't my forever home so I just want it to look good and appeal to buyers.

Open to other suggestions, thanks.
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Old 12-04-2013, 09:28 AM   #52
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A free place to live? Did somebody just up and give you the house?
I think it's comments like this from the OP that leads to some added skepticism from some posters. It sounds like double-counting, and that maybe makes people wonder about other claims.

I don't know what it means to make a profit on the transaction and 'live for free'? Does it mean the profits more than covered your living expenses? If so, it is irrelevant -the profit could be spent on anything (we got a new car for free!). If you chose to spend it on housing, that's fine, but it does not make it 'free housing'. You still had mortgage payments (or capital tied up), utility bills, taxes, etc.

It's just confusing lingo, that's all.


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Old 12-04-2013, 09:41 AM   #53
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I know people who flip houses and don't live in them. They have to pay "mortgage payments (or [have] capital tied up), utility bills, taxes, etc." Those are part of the expenses of the flip. The OP has those same expenses but chooses to live in the house they are flipping. OP saying they live there for free sounds pretty accurate to me..
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Old 12-04-2013, 09:50 AM   #54
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I've actually considered Ikea as a less expensive alternative. Don't laugh
Ikea's cabinets get decent reviews online from what I've read. This isn't my forever home so I just want it to look good and appeal to buyers.
I won't laugh at all. I have friends who are foodies and gourmet cooks who redesigned and renovated their kitchen into a great room using Ikea cabinets. The result is spectacular. And everything lines up!
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Old 12-04-2013, 10:26 AM   #55
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Plan to keep the layout.

These cabinets are old. Probably original cabinets from the late 70s. The upper cabinets seem to be in decent shape. Lower cabinets seem to have a lot more wear. The bottom below the sink looks like some water may have damaged 'em a bit over the yrs.

I've thought about just refinishing, painting, etc. but concerned about the bottom cabinets wear. I guess it's possible to just fix the bottoms without tearing it all out?

I've actually considered Ikea as a less expensive alternative. Don't laugh
Ikea's cabinets get decent reviews online from what I've read. This isn't my forever home so I just want it to look good and appeal to buyers.

Open to other suggestions, thanks.
If you need countertops, something like this is a cost effective way to upgrade. I recently went into my aunt's old house I sold and the lady put in a similar product that looked great. An old neighborhood that doesn't require granite. Amazing how much better the house looks. She even put in crown molding in a couple of rooms. Nothing too expensive, but certainly sets the rooms off.

Shop BELANGER Fine Laminate Countertops 4-ft Labrador Granite Laminate Countertop at Lowes.com
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Old 12-04-2013, 10:27 AM   #56
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I know people who flip houses and don't live in them. They have to pay "mortgage payments (or [have] capital tied up), utility bills, taxes, etc." Those are part of the expenses of the flip. The OP has those same expenses but chooses to live in the house they are flipping. OP saying they live there for free sounds pretty accurate to me..
I'm not following your accounting.

When I sell my primary residence, I will need to calculate my capital gain. Utility bills and taxes are not part of the capital gain. They are living expenses, not expenses of the flip.

If someone is not living in the house, then it doesn't count as a primary residence, so it is kinda outside this discussion. But does that mean that I am 'living in my house for free', because I'm not paying rent/mortgage to live in another house? That doesn't make sense to me.

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Old 12-04-2013, 10:33 AM   #57
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Hypothetical to make this clearer (hopefully). Ignore tax laws etc, for simplicity:

Say I live in a house for 5 years, and my housing expenses are $10,000/year.

After 5 years, I sell my house, and net $50,000.

I could say I 'lived in my house for free' if I want, but then I can't also say that I 'made $50,000 net'. That would be double counting, no?

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Old 12-04-2013, 02:10 PM   #58
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"If someone is not living in the house, then it doesn't count as a primary residence, so it is kinda outside this discussion. But does that mean that I am 'living in my house for free', because I'm not paying rent/mortgage to live in another house? That doesn't make sense to me".

Let me try again. Two flips. One gets lived in, the other doesn't. Same expenses. Both sell for the same price. Looks to me like the one that is lived in is lived in for free.

If you want to get picky,the un-lived in flip gets to sale time and writes off utility and insurance etc. as expenses against the at-sale profit the flipper pays tax on. The owner of the lived in house, as a primary residence and flip, doesn't worry about writing those expenses as any gain is taxfree if flipped within 2 years. Same expenses, tax free expenses in both cases, difference is the OP lived there and makes a tax-free gain vs. the non-resident flipper..
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Old 12-04-2013, 02:28 PM   #59
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Hypothetical to make this clearer (hopefully). Ignore tax laws etc, for simplicity:

Say I live in a house for 5 years, and my housing expenses are $10,000/year.

After 5 years, I sell my house, and net $50,000.

I could say I 'lived in my house for free' if I want, but then I can't also say that I 'made $50,000 net'. That would be double counting, no?

-ERD50
I don't think so. Imagine that you already had a house you liked so you were living in it but then you found a flip house and you buy it and sell it and net $50,000. You net the same $50,000 whether you lived in the house or not. So, if you live in the house instead of living somewhere else I think it is fair to say that you are living in it for free.
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Old 12-04-2013, 02:39 PM   #60
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I agree with ERD50 on this one. The profit is a +50 and the living costs are -50 so the net cash is zero. So any profit - living costs needs to sum to 0.

I think most properly it is that one had a profit of 50 and 50 of living costs. But if you want to think of it as 0 profit and 0 living costs, then go for it.

But you can't claim to have a profit of 50 and 0 living costs because to do so would be counting the profit twice. Profit - living costs must equal zero.
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