This is strictly my opinion, but I think it makes sense. When deciding to start rehabbing homes, I suggest that you make the first one a home for yourself. This can be a great learning experience.
My Reasons:
- No rush
- No need to worry about carrying cost
- No risk of losing money
- After fixing it up, you can get an appraisal to see how you did. If you did well enough, maybe it's time to move
You can live there a few years, build some appreciation, avoid taxes and move up to a bigger and better house
It may not be for everyone, but it worked out for me. We bought a small 2 bedroom house for $57,000 4 years ago. It's not in the most desirable part of Kansas City, but it's still a nice neighborhood. We spent several months remodeling most of the house, but kept the expenses very reasonable. We recently got an appraisal at $108,000. We're moving up to a house in the 200K range that needs just as much if not more work. I estimate it to be worth around $250,000 in a couple of years after our rehab. Since we will already have about $50,000 in equity from our first house sale, plus our new house will be up $50,000, we can move up again if we choose to.
Of course there are always cons as well:
- No rush. Without the pressure, it will probably take 4 times as long to accomplish what you want.
- Just like with any rehab project, there could be unexpected repairs.
- Inconvenience of living in a house that you are working on
- You may fall in love with it an not want to let it go (but that's not a bad thing).
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