Buying Renting vs Flipping? Want experienced advise...?

Buying, living in a place, and selling after two years will allow you up to a $250M capital gain tax free each time you do it. If you're going to flip a property, be careful to consider acquisition cost, carrying cost, and selling costs, in addition to paying higher tax on a short term capital gain - probably not worth it if you can't buy the place for under 60% of current market value, which is very hard to find.

Don't be misled by the amount of gain you've seen in 6 months. While this amount of appreciation can happen for years, it is unsustainable and will be followed by a drop in prices. Knowing this in advance, it's possible to make a lot of money, however, the catch is that it's impossible to perfectly time a market. You can make quick money in the short term, but you can't count on it and you can potentially lose money, too.

If you're serious about continued real estate investment, buy to hold long-term. Most people can't afford much negative cash flow, so I recommend putting enough down so that you can rent out a place and have at least break-even cash flow - that way you'll never be forced to sell in a down market. Good luck to you.

Several GOOD answers. Bottom-line, Renting is your PERSONAL CHOICE and should be respected. Simple numbers make the argument for buying vs. renting. Especially, if you pay about what you could spend for a home. Rents usually ALWAYS increase 2-5% per year. IF you had a mortgage your payments would be set, for a period (usually 30 years) OR until you choose to refinance. MOST workers get raises every year to keep up with the cost of living. While your rent is increasing you do NOT actually see much of the raise. Additionally, you can reduce your taxable income by claiming the mortgage interest you pay during the year. AND last but NOT LEAST, usually homes appreciate an average of 6-8% per year. Renting gives you nothing back except NO COMMITTMENT and flexibility to move out at your desire. Many young families have purchased small homes and have GAINED wealth due to the appreciation of the real estate. IF you do decide to buy, NOW and into 2008 (in most areas) would be a great time to get a decent home at a good price. If you decide to continue renting - take that number X 12 X the number of years (say 8) and see how much you paid to your landlord for walls and bricks. Then take the price of a home you can afford X 6% X 8 years = that is a conservative number for appreciation on your INVESTMENT in real estate. No being negative at all - every person makes choices. What you and your husband agree on will ultimately be RIGH for you both. =)

The property values may not continue to rise as fast as they have been. If you sell within 2 years, you will have to pay capital gains tax, whereas if you wait, you won't. Usually when you flip, you buy something run down, fix it up, and sell it. It sounds like you want to just buy, wait, and sell. The way the market has been lately, I wouldn't try it that way.

Financially, you will make more money in the short term if you sell. If you rent, you will make MUCH less money in the short term, but more money in the long term. You could make a profit of $20,000 (after taxes) by flipping, or $50 a month on your rental (while your paying your mortgage). After your mortgage is paid off, you'll be making whatever the rent is... Lets say $1200 a month. So $50 a month for 30yrs is $18,000, then $1200 a month is $14,400 a year for as long as you own it. THEN you can sell at make whatever the house is worth when you tire of it, and walk away with 200-300k.

Regardless of where you live there is a tax benefit called Capital Gains Tax. It must be your primary residence for at least 24 months for you to be able to sell it and keep the profit tax free. My advice to you would be to keep it. Here is why. If you keep the property and rent it out, you can still use the equity to purchase another property without giving it up. This way you have 1 home in which the mortgage is being paid by others and then you have your new home for which you are paying for. You obviously are still responsible for the mortgage on both but this method is called using leverage to purchase. My wife and I own a few homes and have done this several times. You leverage your equity to help make you wealthy. There is a saying that is especailly tru e here in California, it goes like this, Realtors can make a lot of money helping people buy and sell real estate, but the people who pick up pieces of property themselves are the wealthy ones. Since you have only owned the property for 6 months, you definitely do not want to sell it because the taxes will take a majority of your profits. Use the equity and pick up another property and you will be on your way to establishing yourself a nice property portfolio.

That's why I love real estate and have been in it since the mid 70's, if done right you can't go wrong.

Here is what I've done before but check with your lender for proper advice.

I have taken the property that has shown the increase, appraise it, refinance it, assuming that you can afford the low home mortgage payment for the increase versus a regular loan interest, and use the excess money from the refinance to acquire another one and stay in the refinanced home until you want to. Rent the other one for more than the bank payment on the acquisition, plus tax and insurance for purposes of retiring the loan faster than the terms outlined. Do that enough times and you will build one heck of a retirement plan.

Best of luck to you

You pay fewer dollars in taxes if you rent it out than just flip it and sell it immediately because in renting it makes the purchase of the house look like a long-term investment, which has a lower tax amount. If you flip it, it's seen as a short-term investment and is put in a higher tax bracket.

Just because house prices have increased in the past doesn't mean they will increase at the same rate in the future. Already prices are falling in many parts of the country.

yes if you buy another house under your tax id number, the tax board is going to tax you on the profits for that year. they will not tax you if it is your personal home, but they might if its a home for investments.