{"id":1787,"date":"2016-07-04T10:37:05","date_gmt":"2016-07-04T15:37:05","guid":{"rendered":"http:\/\/www.investmentzen.com\/blog\/?p=1787"},"modified":"2022-05-20T19:22:25","modified_gmt":"2022-05-20T23:22:25","slug":"how-to-start-flipping-houses","status":"publish","type":"post","link":"https:\/\/www.investmentzen.com\/blog\/how-to-start-flipping-houses","title":{"rendered":"How I Built My Nest Egg Flipping Houses"},"content":{"rendered":"

As a 42 year old, I\u2019m happy with my lot in life. My net worth\u00a0sits at about $1,400,000 and I recently accomplished my life’s financial goal<\/a>.<\/p>\n

There\u00a0will always be someone younger and with more money, but I\u2019ve set myself up financially for the rest of my life. I\u2019ll leave my full-time job soon and start pursuing activities that\u00a0I\u2019ve been dreaming about for years without the constraint of having to earn money.<\/p>\n

Financial Independence is a great feeling<\/a>.<\/p>\n

Today, I\u2019m going to share with you how I built the core of my nest egg. It wasn’t related to my computer career or an inheritance. It had everything to do with real estate.<\/p>\n

How I unintentionally became a live-in home flipper (and discovered tax-free, capital gains)<\/strong><\/h2>\n

Live-in\u00a0flip<\/strong>: Fixing up a home to sell for profit, but you live in the home at the same time.<\/p><\/blockquote>\n

I’m a white collar guy. Or at least I used to be. I studied science in college and have had a successful career as a computer programmer. Younger me felt much more comfortable around\u00a0a bunsen burner or computer monitor than a table saw.<\/p>\n

Fresh\u00a0out of college, I had no home improvement skills. If you asked me how to start flipping houses I’d have no idea.<\/p>\n

Then, an ugly floor changed all that.<\/p>\n

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Recent tile work<\/p><\/div>\n

Before marriage, my future wife and I\u00a0each had our own homes. Mine had a better location, so we decided to sell hers. However, there was one problem, the kitchen floor.<\/p>\n

The previous owners\u00a0had done a very poor job of installing\u00a0linoleum tile. The floor\u00a0was peeling up all over the place. We knew that we’d have to replace the floor\u00a0before the home went on the market. My future father in law\u00a0knew how to set ceramic tile and offered to help.<\/p>\n

Over the course of a weekend, we yanked up the old linoleum\u00a0and put down a beautiful ceramic tile floor. I was terrified when it came time to put my first tile down. By the end of the weekend though, I was fairly confident in\u00a0my\u00a0new skill and felt on top of the world.<\/p>\n

Not more than a month later, I went to work on the bathrooms in my home. I replaced\u00a0the dated, pink tile on the floor and in the showers. The job\u00a0looked great, but much more importantly, I was gaining confidence and my mindset was changing.<\/p>\n

From then on, I was a changed man. I wasn’t afraid to try anymore.\u00a0When something broke, I tried to fix it. My toilet started leaking and I installed a new flapper valve. My bathtub faucet dripped, so I ordered a cartridge kit and repaired it. I replaced the hot water heater when it quit.<\/p>\n

I knew that I could always just call a pro if my job went bad, but it never did. I also knew that if I needed financial aid with the renovation, I can always look into home improvement loans.<\/a><\/p>\n

$100,000 profit (tax free)<\/strong><\/h2>\n

Our path flipping houses\u00a0was set when we decided to move. With our improvements and a healthy real estate market, we ended up selling the home for $100,000 in profit. Because of the 2 out of 5 year IRS rule<\/a>, the $100,000 was completely ours.<\/p>\n

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2 out of 5 year rule, straight from the IRS’ mouth<\/p><\/div>\n

You heard right, not one dime went to the tax man. We were over the moon and decided we’d try it again. First, we set some basic requirements for our next flip (aka: how to make money flipping houses 101):<\/p>\n