Allowing Appreciation To Do Its Stuff
From talking to many investors, most of them seem to have bought a property that needed work, fixed it up, and held it for a year. They seem to have made a majority of their equity during the holding period. Do you find that most of the properties you have made money on have been through buying, fixing and then holding/renting it for a year before selling, thus allowing appreciation to do its stuff? Could it be risky to try this strategy since housing has gone up so much in the past few years, it could stop appreciating soon?
I've done it both ways. I've done fix ups and hold as well as fix up and sell. You can make money both ways. The difference here is mainly in the tax advantage to holding for a year or more as a long term gain vs a short term gain or as a dealer status (flipping). There is also some advantage to getting some of your money back by recieving rent for a year and the appreciation of anywhere from 4 to 10+ % depending on the area where you live.
It all depends. For example, if you purchase a house in preforeclosure, and they bought it in 1996. You pay what they did plus a little. Depending on the property, in Massachusetts a house bought in 1996 for 130k is now worth over 300k. so in that case, buy to stop the foreclosure, and list right away. Other situations, houses need work, so you buy it for 130 (what they paid in 1996) put 20k into, and then sell it for 275 after 3 months of rehab. There is really no norm for anything like that. Its usually a house to house basis.
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