The Best “Early Retirement” Strategy 99% of Investors Ignore

Summary

BiggerPockets Real Estate Podcast Summary
Episode: The Best “Early Retirement” Strategy 99% of Investors Ignore
Release Date: June 11, 2025
Host: Dave Meyer
Guests: Ashley Care, Mindy Jensen

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Introduction to the Live in Flip Strategy

In this illuminating episode of the BiggerPockets Real Estate Podcast, host Dave Meyer introduces a lesser-known real estate investment strategy called the Live in Flip. This approach combines elements of both traditional house hacking and house flipping, offering investors a pathway to significant, tax-free profits that many overlook.

Dave Meyer kicks off the discussion by teasing the strategy’s potential to "put you on the path to early retirement with millions of dollars in the bank" (00:00). Unlike conventional methods, the Live in Flip emphasizes owner occupancy, allowing investors to benefit from favorable financing terms and substantial equity growth without the immediate pressure to sell.

Defining the Live in Flip

Ashley Care and Dave Meyer delve into what exactly a Live in Flip entails. Ashley Care succinctly describes it as a blend of owning a primary residence while simultaneously renovating it with the intention to sell later. This dual-purpose strategy not only provides a place to live but also serves as an investment vehicle.

Dave Meyer elaborates on the benefits:

• Owner Occupancy: Typically results in better financing terms (02:05).
• Flexible Renovation Pace: Being a homeowner allows for a more relaxed renovation schedule compared to traditional flipping (02:08).
• Tax-Free Gains: If the property is lived in for at least two years, the profits from the sale are exempt from capital gains taxes, a stark contrast to traditional flips taxed at higher ordinary income rates (02:21).

Guest Insight: Mindy Jensen’s Experience

Invited to share her expertise, Mindy Jensen, a seasoned investor with ten Live in Flip projects under her belt, provides practical insights into the strategy. Her first Live in Flip in 1998 resulted in a substantial profit of $25,000 on a condo initially purchased for $50,000, eliminating her debts and demonstrating the power of this approach (02:58).

Step-by-Step Approach to Live in Flips

Ashley Care and Mindy Jensen outline a comprehensive, step-by-step guide for those interested in embarking on a Live in Flip:

1. Market Research: Identify cities with growth potential. Targeting mid-growth markets can offer better opportunities than saturated top-growth areas (14:36).

2. Property Selection: Focus on older homes (preferably built in the 1970s or earlier) that require manageable renovations. Mindy emphasizes the importance of seeing the property in person to uncover hidden issues not visible in online listings, such as severe odors or hidden damages (14:31).

3. Visit and Inspect: Walking through the property helps in accurately assessing renovation needs and potential value-additions. For instance, Mindy discovered extensive smoke damage and outdated fixtures that weren’t apparent from MLS photos (17:07).

4. Financial Planning: Decide on financing methods—options include conventional loans, FHA loans, private money lenders, or lines of credit. Mindy Jensen highlights using a combination of an ARM loan and refinancing to fund renovations without excessive upfront costs (33:05).

5. Renovation Strategy: Develop a balanced plan that enhances resale value while improving personal living conditions. Mindy and Ashley discuss prioritizing timeless upgrades over trendy changes to maintain broad market appeal (22:37; 23:27).

6. Execution and Management: Decide between DIY renovations or hiring contractors. Mindy shares her hands-on approach, managing various aspects of the renovation herself while collaborating with subcontractors for specialized tasks (08:24; 08:54).

Mitigating Challenges of Live in Flips

Living amidst ongoing renovations can be demanding. Mindy Jensen offers strategies to alleviate these challenges:

• Create Comfortable Retreats: Ensure that family members, especially children, have designated spaces that remain functional and comfortable during the renovation process (29:42).
• Involve the Family: Engaging family members in decisions fosters excitement and cooperation, making the experience more enjoyable for everyone involved (31:21).
• Flexible Timelines: Acceptance that renovations may face delays and being prepared to adapt helps maintain a positive outlook (38:12).

Financing Options and Tips

Financial management is crucial for the success of a Live in Flip. Both Ashley Care and Mindy Jensen discuss various financing strategies:

• Adjustable-Rate Mortgages (ARMs): These can offer lower initial interest rates compared to fixed-rate loans, which is beneficial if planning to sell within a few years (35:33; 34:09).
• Lines of Credit: Utilizing home equity lines or investment property lines of credit provides flexibility in funding renovations without tying up immediate cash (35:33; 36:14).
• Store Credit Cards: Opening store-specific credit cards (e.g., Home Depot, Lowe’s) with promotional interest rates can help finance minor renovations, provided the balance is managed within the interest-free period (36:14).

Live in Flip vs. House Hacking

The episode contrasts Live in Flips with another popular owner-occupied strategy, House Hacking. While both involve living in the property, their objectives differ:

• House Hacking: Primarily focuses on generating cash flow by renting out portions of the property.
• Live in Flip: Aims to build equity and secure tax-free profits through strategic renovations and eventual sale.

Mindy Jensen suggests that personality and tolerance for renovation hassles play significant roles in choosing between the two. Live in Flips require a project manager mindset and adaptability to unforeseen challenges, making it more suitable for investors comfortable with hands-on management (37:31; 38:09).

Personal Experiences and Success Stories

Dave Meyer shares his successful Live in Flip journey, highlighting a recent project where he achieved a $276,000 tax-free gain by renovating a neglected property into a desirable home (06:17). This example underscores the lucrative potential of the strategy when executed thoughtfully.

Practical Tips for Success

To ensure a smooth Live in Flip experience, the guests offer several practical tips:

• Detailed Budgeting: Start with a comprehensive budget but remain flexible to adjust as renovations progress (20:54).
• Time Management: Utilize Owner Occupied benefits to manage holding costs effectively, reducing financial strain even if renovations take longer than planned (05:57; 21:46).
• Focus on Universal Appeal: Prioritize renovations that enhance the property's appeal to a broad range of buyers, thereby maximizing resale value (23:49).

Conclusion: Is Live in Flip Right for You?

The episode concludes by encouraging listeners to assess their personal circumstances and investment goals to determine if a Live in Flip aligns with their strategy. Factors such as investment horizon, capacity to manage renovations, family dynamics, and financial readiness are pivotal in making this decision.

Mindy Jensen emphasizes that Live in Flips are ideal for those who enjoy hands-on projects and can maintain flexibility amidst the uncertainties of renovation (37:31). Meanwhile, Ashley Care highlights that for investors prioritizing cash flow or seeking lower capital investment, House Hacking might be a more suitable option (39:58).

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Notable Quotes:

• Dave Meyer (02:21): "If you live in the property for two years or more, when you go and sell it, all the gains that you get are tax free."
• Mindy Jensen (17:07): "I'm not a fan or an advocate of buying sight unseen. I want to be in this property. You can't smell a picture."
• Dave Meyer (06:17): "The last house I sold, I got a $276,000 gain. Tax free. Yeah, that's like basically earning like 400 grand."
• Mindy Jensen (29:42): "Step number one is if you're doing this with your family, make a comfortable place for them to be able to retreat to and also make a comfortable place for you to retreat to."

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This episode serves as a comprehensive guide for real estate investors considering innovative strategies to achieve financial freedom and early retirement. By exploring the Live in Flip method, Dave Meyer and his guests provide actionable insights and real-world experiences that can help investors make informed decisions tailored to their unique situations.

Transcript

[Dave Meyer]

This overlooked real estate strategy can put you on the path to early retirement with millions of dollars in the bank. Both of today's guest and I are.

[Ashley Care]

All doing it right now.

[Dave Meyer]

Spoiler alert. It's not traditional house hacking. In this episode, we'll break down how to add huge value to your portfolio. All tax free.

[Ashley Care]

Hey everyone. I'm Dave Meyer, head of real estate investing at Biggerpockets.

[Dave Meyer]

I've been buying rental properties for 15.

[Ashley Care]

Years and now I'm teaching you how to secure your financial future too. Today we're talking about a strategy called.

[Dave Meyer]

The live in flip. It's not exactly house hacking.

[Ashley Care]

It's not exactly house flipping, but it.

[Dave Meyer]

Combines the best elements of each, provides.

[Ashley Care]

Huge tax free returns, and can be less disruptive to your day to day.

[Dave Meyer]

Life than you might think.

[Ashley Care]

I I'm personally going to start working on a live in flip in the next couple of weeks and I was.

[Dave Meyer]

Talking about it with my colleagues at.

[Ashley Care]

BiggerPockets and two of them are doing the same. So they're joining me on the show today to talk about them. Ashley Care, how are you?

[Mindy Jensen]

Good. Thanks so much for having me on today.

[Ashley Care]

Absolutely. Is this your first live and flip?

[Mindy Jensen]

Yes, it is.

[Ashley Care]

Okay, mine too, but we also have Mindy Jensen on. And Mindy, welcome to the show first and foremost.

[D]

Thank you, Dave. It's lovely to see you. Hi, Ashley.

[Mindy Jensen]

Hi.

[Ashley Care]

Now show us up. Mindy, how many live and flips have you done?

[D]

I am in my 10th.

[Ashley Care]

Okay. Yes. So this is just going to be Ashley and I asking you for personal advice this entire time then.

[Dave Meyer]

All right, let's get into it. First and foremost, let's define what a live in flip is.

[Ashley Care]

For anyone who doesn't already know, Live.

[Dave Meyer]

In flip is basically when you live in a house, you renovate it and then you sell it.

[Ashley Care]

So it basically combines your primary residence with a flip.

[Dave Meyer]

And this might sound really obvious or.

[Ashley Care]

Maybe not even like an investment, but.

[Dave Meyer]

There are a couple reasons why this.

[Ashley Care]

Is such a good strategy.

[Dave Meyer]

At least there are reasons I like it. The first is that you owner occupy.

[Ashley Care]

It, which means you can get usually better financing terms.

[Dave Meyer]

The second is because you're living in it, you can go at a more.

[Ashley Care]

Casual pace than you would with a traditional flip.

[Dave Meyer]

And third, you can still build huge.

[Ashley Care]

Amounts of equity like you would with a traditional flip.

[Dave Meyer]

But you if you live in that property for two years or more, when you go and sell it, all the gains that you get are tax free. When you compare that to a traditional flip that is actually taxed not at.

[Ashley Care]

Capital gains of 20%.

[Dave Meyer]

It's actually taxed at your ordinary income.

[Ashley Care]

Rate which is usually higher than that.

[Dave Meyer]

So the reason this is so great.

[Ashley Care]

Is it gives you a place to.

[Dave Meyer]

Live, you can build massive amounts of equity and when you go and sell the property, you are able to get all of those gains tax free. Those are at least the reasons why I like live in flips and why.

[Ashley Care]

I am about to take on my first.

[Dave Meyer]

But Mindy, what are the reasons you like?

[D]

I first did this in 1998, selling in 2002. So I lived there for four years and I made again it was the time $25,000 on a condo that I bought for $50,000. I paid off all my debt and at the time I was making $24,000 a year. So I was like, whoa. And I'm paying taxes on that 24,000. I got 25,000 for free.

[Ashley Care]

Wow, that just demonstrates the power of the live in flip. Ashley, tell me a little bit why, why is this appealing to you and why are you choosing to do your first one now?

[Mindy Jensen]

I think there's just a huge advantage as to how you can purchase the property. You can get very good loans for it being your primary residence. I have the flexibility now, I guess where it doesn't really matter where I live. And I think the fact that this is a really attractive, easier way to invest in real estate where you can get that tax free gain. So instead of spending all this time working on building up money to buy this already done primary residence, I'm just going to suffer a little and live here while we have it.

[D]

I mean, you need to live in a place anyway during those two years. You might as well live in a place that is going to make you money because you, your primary residence isn't technically an investment. It is a place to live. And my primary residence is an investment because I bought very ugly, very low and I've spent a lot of time fixing it up. So when I sell it, I'm going to make a lot of money tax free.

[Ashley Care]

Well, this is just one strategy. I, I've, I rally against this all the time on the show. I hate when people say that your primary residence isn't an investment and there are very prominent real estate educators who say that. I just think it's a choice. Like if you just go out and buy a really recently flipped house on Zillow and pay a lot of money for it, yeah, that's probably not the best investment for you. But you can make your primary residence investment whether It's a house hack or a live in flip, so all of us are choosing to do that. Ashley, where are you in this stage? Have you already closed? Are you in the midst of it right now?

[Mindy Jensen]

Yeah, so I actually bought it using a private money lender, so I didn't buy it using a primary residence home, so that way I could kind of do like a mini bar with it. So it actually sat vacant for four years. When I closed on it, there was a bunch of stuff that needed to be done immediately. So we rushed and within three weeks, we got it, like, livable. Like there was no running water. We had to replace all the plumbing. The septic had like a leak. We had to get that cleaned up, everything. So we got moved in, and then we did a couple of things just for appraised value, and now we're going through the refinance process. Then when we are done refinancing, then we'll go and use that money from our down payment and the other rehabs we already did and go ahead and do more to the property.

[Ashley Care]

Okay, well, I do want to turn the conversation to sort of a step by step approach here, like how we. How we can approach this, if you're interested in doing this type of thing. But Mindy, I want your opinion on the measure. You've done this 10 times now. I'm sure for a lot of people listening to this, it sounds terrible. You know, you're living in a construction zone. You're, like constantly managing these things.

[Dave Meyer]

Is that the reality?

[Ashley Care]

And if so, is it worth it? Or are there sort of ways that you can mitigate how challenging it is?

[D]

Yes, it's worth it because I am cashing giant checks at the end of it, and that makes it all worthwhile. Like, you just don't even remember the pain that you went through, and you're like, wow, I. The last house I sold, I got a $276,000 gain.

[Ashley Care]

Wow. Tax free.

[D]

Tax free. Yeah.

[Ashley Care]

It's like basically earning like 400 grand.

[D]

Yeah, yeah, exactly. Yeah. It is a huge amount of money that I then roll into the next property or put into the stock market, depending on how much it is. The next property I bought for $365,000.

[Ashley Care]

Wow.

[D]

That's the one that I'm sitting in now. This house is a sort of a cookie cutter house in a neighborhood where there's a lot of other houses just like this. And one, the run up in 2022, before rates changed, one of this model house sold for $850,000.

[Mindy Jensen]

Wow. And you bought it for three something.

[D]

Yes.

[Mindy Jensen]

Wow.

[Ashley Care]

Mindy, you are. You are very good at this.

[D]

My house was super gross. Like, this house was a smoker's house. I bought it from the original owner. They smoked in it for 40 years. And when I came to see it first, it had been sitting on the market for three weeks. They didn't open a window ever. And I walked through the house. I was here for probably an hour. I had to go home, take off my clothes, and put them in the washing machine and scrub the smoke smell out.

[Dave Meyer]

Okay.

[Ashley Care]

Well, I mean, both of you also have a family, and so you're doing this with your family. Has that been a challenge for you, Ashley?

[Mindy Jensen]

No, I. A big priority was to finish the kids rooms first.

[Ashley Care]

Okay.

[Mindy Jensen]

So, like, before we even had the, you know, anything with the downstairs even touched, and while the plumber was working, working on the plumbing, that's what we focus on, is giving them these really cool bedrooms. So, like, nice. Their bedrooms are done. So, like, if there's construction anywhere else, they at least have, like, their own space that's done and whatever, you know, they wanted in there.

[Ashley Care]

Who's doing the work? Are you diying it sort of like Mindy style, or do you have a contractor?

[Mindy Jensen]

So we did use a plumber to do all of the plumbing work. That was the really big thing. We didn't really have to do any electrical. And then Daryl refinished all the hardwood floors, and then we used just a lot of subcontractors. Like, we had a flooring company come in and put some carpet in the kids bedrooms. We did the vinyl plank. Like, we redid a lot in the basement already, so we put down the vinyl plank, things like that. Any drywall repairs, we've done ourself.

[Ashley Care]

Oh, cool. You know, I. I haven't closed on mine. I'm closing on mine tomorrow, so I have no idea what I'm going to do.

[Mindy Jensen]

Oh, congratulations.

[Ashley Care]

Thank you. Yeah, I'm excited, and I am intending to hire a GC to, like, basically do the entire thing. But, Mindy, you're sort of on the other end of the spectrum too, right? You're. You basically do everything yourself.

[D]

Yes, with my husband. And it's gonna take us two years, or we have to be there for two years anyway, so we don't have this mad dash to get it all done. On the other hand, you are living in a construction zone until you're. You're done. So it can be a little bit wearing on the family, especially the kids, if they are not excited about the project in the first place. Having a space for them to go to, to call their own to close the door and have it be just. I'm blocking out all of the dust and dirt and whatever is really important for getting them on track. But yeah, it is a super fun experience. Dave, you're going to have so much fun.

[Mindy Jensen]

Dave, are you going to move into it and then rehab along the way or are you going to redo it and then move in?

[Ashley Care]

I think we'll probably live in it for a couple of months to just like really decide what we want to do. And then intending to hire a contractor, estimates are like three to four months. It's a split level, so I'm hoping I can phase it where I redo the basement first. We can move downstairs and then do the upstairs. We'll probably still have to move out for like a week or two, but hopefully not having to move out for more than that. But we'll see how it goes. We do have to take a quick break, but when we come back, I want to talk step by step if people are interested in this concept. How do you go from, you know, wherever you're living situation situation is now to finding the right deal, figuring out your plan of attack and then maximizing your roi? We'll get to that right after this quick break.

[Dave Meyer]

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[E]

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[Ashley Care]

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[Dave Meyer]

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[E]

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[F]

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[Dave Meyer]

Welcome back to the Biggerpockets Podcast.

[Ashley Care]

I'm here with Ashley Kerr and Mindy Jensen talking about a strategy I've personally been Sleeping on. I think a lot of people sleep on, which is the live in flip.

[Dave Meyer]

And now we're going to turn our.

[Ashley Care]

Conversation to how to do this if you actually want to. So, Mindy, maybe you can help us if you're interested in this. What kind of properties do you normally target or is that even the right place to start?

[D]

Well, it's not quite the right place to start, but we'll get into that into a minute.

[Ashley Care]

Okay.

[D]

First, you need to know your market. You need to be able to hop on a property as soon as it pops up. And this is true for all investments. So what makes a good live in flip? You need a city that has growth potential or is in the middle, not the top of the growth market. Once you've decided on a city, start really looking at the neighborhoods. What makes a good flip for me is an older home. 1970s build. I really love 1920s build. I don't love. They've got that. I don't even know how to pronounce this. Is it plaster and lath or plaster and lathe?

[Ashley Care]

Lathe, yeah. I don't know.

[D]

That's wood slats with, like, mesh wire and then heavy, heavy, heavy plaster on top of that. And that's a pain to remove. I love a good drywall house. 1970s construction has modern construction techniques.

[Ashley Care]

Yeah.

[D]

But if you can find an original owner or who, like, maybe they did one remodel in the 80s and they're like, we're good. That's a prime target for. For your house.

[Ashley Care]

Is that sort of what you targeted, Ashley?

[Mindy Jensen]

Actually, this was an accident. This property was my dad's friend. It was his childhood home, and his mom was really sick, and so they wanted to get rid of the house, and she wasn't living there anymore. And actually, right before we signed the contract, she ended up passing away. So then we had to wait for her estate to be put together, the executor of her will to be named, and that took a whole nother year. So I actually had it under contract for a year before we actually closed on it. And when I got it under contract, the intention was to just flip the property. But then I was just outgrowing where we already lived. And so we decided to rent that property out and move into this one. So it really, like, the market was great to flip the house. There was potential. I was getting it below market value. The rehab was very manageable for me. So the deal came to me before I was even looking for it.

[Ashley Care]

What is it? How old is it? I know like, you know, in Colorado, a lot of things are built. 56,070s in the Northeast. It could be pretty old.

[Mindy Jensen]

This one is 1950, and it was also just one owner the whole time.

[Ashley Care]

All right, so that's good advice on targeting a property. And, Mindy, once you find and identify a property, what's the next step? Do you move in and then do a plan? Do you plan first or how have you done it in the past?

[D]

Well, once I find the property on the mls, I go and see it. And I am not a fan or an advocate of buying sight unseen. I want to be in this property. You can't smell a picture. I thought this house was just ugly. And then I walk in, and that aroma of cigarette smoke for the last 40 years was really overwhelming. And that's one of the reasons why the house sat on the market for so long. I knew that it was ugly and needed a whole new kitchen, three new bathrooms. It had white carpeting. I don't even understand why they make white carpeting, but I digress. All of the beams, the exposed beams were this, like, weird orange color. The. The varnish kind of aged over time. But I wanted to get into the property first. And I absolutely recommend, because they also don't put every single picture, every single room on the Internet. On the mls, you can hide a lot simply by omitting the evidence in the mls. So you need to be in that property.

[Ashley Care]

Yeah. It's funny because, yeah, if you have a nice turkey property, they want to show off everything. But the kind of properties you're talking into, they're showing as little as possible.

[D]

As little as possible. One thing they did not show on the MLS were those little green bars of mouse poison all over the house.

[Ashley Care]

Oh, God. Wow. And this is what you like?

[D]

Yes. Hey, that's great. I can clean that up. I can close up all the holes. I can get rid of the mice. It's an easy fix. It's just kind of gross. Yeah, But I don't touch meth houses, broken foundations or mold problems. Because I want to be able to move in the day that I close.

[Ashley Care]

Yeah, because you don't want to sit on those holding costs. So when you're at that property, though, how sophisticated or finished of a plan do you have about what you're going to do? Like, in your head, are you saying, like, oh, I can drive up the value in the ARV by doing XYZ and you just kind of have a rough idea, or are you, like, really thinking about, like, here's exactly What I'm going to do, putting together a budget or when does that come?

[D]

So, yeah, as I'm walking, I open the door, I walk through the house first. Just what's here? Oh, okay. There was a fire and they didn't show that part of it. Great, I'm out. I'm not touching this firehouse. Or hey, it's just really ugly. I can handle that. And then I'll go back in. Okay. There's. There's a bathroom that's $5,000. There's a bathroom that's $5,000. There's a bathroom that's $5000. The $12,000 kitchen. I need all new flooring. Let's call that 10,000 and I'll figure it out later. The roof is in great shape or the furnace is older than me. What is this all going to cost? Okay, this needs about $75,000 worth of work. I'm getting it for 365. I know it's worth a lot more than 365. So this makes sense to put in an offer. I'm going to put in an aggressive offer because I already have a house. I don't need to move. I want to move because I'm done with the other house.

[Ashley Care]

I want to give you a little more credit than you're giving yourself, Mindy. You're running the numbers. You're doing a little bit of your own Mindy math there. But you, you, it's just because you know it well. You're not like, just like, oh, buying this without a thought to what the ARV is and what you're going to put into it. But I also think that kind of speaks to the how beneficial a live in flip is and that it's a little bit more forgiving than I think, a regular flip or even a rental property purchase because of these tax benefits. Because of the time frame that you have, it gives you a little bit more cushion. I know that if you're flipping a house, you have to really be on budget, but also be on time schedule. And so this kind of allows you to maybe be a little bit more. A little loosey goosey where you are. Ashley, did you, did you do the same thing or were you putting together a more detailed budget?

[Mindy Jensen]

I had a very detailed budget put together because originally I was just going to flip it.

[Ashley Care]

That's right, Yeah.

[Mindy Jensen]

I mean, I kind of threw that out the window because obviously when, if I was doing a flip, my starting point wouldn't have been the kids bedrooms. Like, it would have been Doing the bathroom with the kitchen. But so our timeline at least has definitely changed and I think just like a huge benefit doing the live and flip is you have to pay for somewhere to live anyways. So my holding costs are completely different because I, I'm paying the mortgage. I don't have to worry about if the property sits too long, me coming up with more money to cover the payment on that. So I think that's a huge benefit. But yeah, I had done a pretty detailed budget. It definitely has changed and will be changing because we are living here. So I want to make it a little bit more of what I would like than just doing a, you know, a six month flip and right, done with it.

[Ashley Care]

Are you definitely going to sell after two years, Ashley, or if you know, if it's working for you, could you live there longer?

[Mindy Jensen]

Every single person in my family says that I will, they will not want to leave and that I will be changing my mind to. That just makes me more determined to find them an even better house because that's literally what they said about the last property and we did love it so much we kept it as a rental so that we didn't have to sell it and I found them a better house so that exactly what I'm going to do. Yes, I do see myself selling it.

[Ashley Care]

One of the things that's sort of challenging me about planning the scope of the renovation is like what do you do for resale value and what do you do for your own quality of life? It's not that hard. Like a lot of things I want to do for quality of life will also improve the resale value. But have you run into any of those challenges, Ashley?

[Mindy Jensen]

Yes, because Darryl said I need to build out like this workshop in the garage and like get all this organization done in there and all these things. I'm like, no, because that's like the stuff you're going to cabinets and things you're going to take to the next house. That's not like a priority for resale value.

[D]

Current kitchen cabinets go in the garage.

[Mindy Jensen]

Yeah, that's actually a great idea.

[D]

That's how you do every, every house I've ever had except for this one. We just got rid of all the cabinets because there's no space in the garage. It's like the tightest two car garage I've ever had. But otherwise, yeah, the cabinets go in the garage and that's when you can tell that the house has been remodeled at least once. Oh look, there's the original cabinets. Now there's storage in the garage.

[Ashley Care]

Mindy, how do you navigate that when you're sort of designing, coming up with the scope of work? How much do you prioritize resale value versus your family's quality of life while you're living there?

[D]

I am always looking to sell the house. So I am always, first and foremost, what is going to appeal to the most people. Yeah, I do Ikea kitchen cabinets, and I choose the doors that I like, not the doors that I love and want, but the doors that I like that I think will also appeal to a lot of people.

[Ashley Care]

To your point, part of it is also, like, if you're waiting a couple of years, trends don't change that much. But there's sort of this, like, desire to renovate in a more. At least for me, in a more, like, timeless way than you might do if it was just a flip to be, like, on trend for that year. Because if you sell it in two years or three years, we might not be in this era where brass finishes are really trendy anymore, and people might be going back to the brushed. Mindy's just making faces about brass finishes, so maybe everyone agrees, and we're not gonna have brass finishes in two years, and we need sort of a more timeless look as well. I don't know if that's what you're getting at, but that's kind of what.

[D]

Made me think of, yeah, absolutely. I want the most people to walk into the house and say, ooh, I like this. And do I. I love the color pink. I would love to have a pink backsplash. I would never put a pink backsplash in a house that I was live in flipping, because, a, I don't want to replace it, and that's not going to appeal to the most people. So I have a really beautiful blue backsplash, and I have amazing gray tile floors, and they are boring, but nice. And I think that's really what you want is boring but nice. Trends are appealing to some people, but a more timeless look is better and a neutral palette so that if they want to come in and they're like, oh, I don't like this wall color, I can change the wall color, but, wow, look at that kitchen. Make it appealing to as many people as possible. Now, on the flip side side, Carl and I are getting ready to tear down a rental that we have and rebuild with everything that we want. I have a bigger kitchen than what was normal. I have an island in my kitchen that's going to be 5ft by 8ft, and I cannot wait.

[Ashley Care]

Wait. So this is your next house? This is so you're doing a Live in flip. When you sell the Live and flip, you're going to move into this new build.

[D]

Yes, this is our forever home. And after 10 I'm getting a little old and a little tired to keep doing this live in flipping it because we're doing all the work ourselves. It is a real strain, you know, mentally and physically and sure. I just don't want to live in a construction zone anymore.

[Ashley Care]

And talking about living in a construction zone, I want to talk about sort of the ways you know, I cheated Mindy and listen to your podcast. So I know some of them. But I want to talk about some of the ways that you can make a live in flip manageable and easier on yourself and your family. We do have to take another quick break though. We'll be right back.

[E]

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[Dave Meyer]

Like BiggerPockets welcome back to the BiggerPockets podcast.

[Ashley Care]

I'm here with Mindy and Ashley talking about the Live In Flip.

[Dave Meyer]

Obviously there's so many upsides to the Live in Flip.

[Ashley Care]

The downside is just inconvenience. It seems to me like I can't really think of many other downsides. It's relatively low risk. There's these tax free gains. There's it's just a little very forgiving. So Mindy, tell me a little bit about how you mitigate the inconveniences for yourself.

[D]

Step number one is if you're doing this with your family, make a comfortable place for them to be able to retreat to and also make a comfortable place for you to retreat to. So we have sometimes lived in one of the kids bedrooms while we're rehabbing the master bedroom. But we don't rehab all the bedrooms at once and sleep in the living room, which also has no drywall and it's the middle of winter and freezing cold. We always have a space that we can retreat to. And that's really, really important because every once in a while your spirit will break. And if I can talk you out of a live in flip, then live in flipping is not for you.

[Ashley Care]

Your spirit breaking is. Yeah, that's maybe the ultimate inconvenience.

[D]

Remember that time that it rained in my house because we, we had a thousand year rainstorm and I had a four month old baby and there was one spot right in the middle of the bed that I could put her and she wouldn't get rained on. As we're running around the house all night long carrying buckets of water into the bathtub to dump it out and then go put the bucket back because it was raining in the house. That was a spirit breaking moment.

[Ashley Care]

You're not really selling this right now, Mindy. You're really just.

[Mindy Jensen]

My kids would love that rain in the house running around and slide across the kitchen floor.

[D]

So Dave, you're in Seattle. Don't rip the roof off during the rainy season.

[Ashley Care]

Yeah, that's a good point. So I like that tip of sort of creating a space that people can retreat to. Actually, it sounds like you, you know, did your kids rooms first, which makes a lot of sense. Was there anything else you did ahead of time to try and minimize any inconvenience?

[Mindy Jensen]

Not really. The kids were really excited about it. Like we actually had another property we were going to move into and we kind of let them pick. It was a rental I'd had for a long time and they chose this one. And it. I'm so glad they made that decision because I like it a lot better now than the other one. Just looking back or like, why would you ever decide? So like just including them into the decision, I think was like a big part of it too. And like how cool they got to pick between houses. Like how many kids have that option, you know, and we weighed the pros and cons with them.

[D]

I love that you're including them.

[Ashley Care]

Yeah, that's good. That's good for them. So. Okay, I, I wanna, I wanna turn the conversation one more time just to some, some practical things here for the audience. Let's talk a little bit about financing because there's a lot of different ways that you can go about this. Like for example, I. My property is not in such bad shape, so I'm able to get a conventional mortgage on it. Ashley, it sounds like you bought it with private money now you're doing a bunch of different things and you're sort of taking a refinance approach. And I assume you're going to use the money you pull out of the refi to fund the rest of the rehab. Is that kind of how you're doing it?

[Mindy Jensen]

Yeah. So the two advantages to this is that one, we got to have an appraisal done. So with the work we did, we kind of saw where we stood as far as current comps or whatever. We also got to see like what kind of hurt our appraisal compared to the other properties. You know, you look at an appraisal report and it gives you the comparables and it says like $20,000 was taken off in value because you don't have this that other properties had. Like one thing that really stood out to us is like on the first floor is the master suite, but there's no other bathroom. You either have to go upstairs or down in the basement.

[Ashley Care]

That's a pain.

[Mindy Jensen]

So that, and they actually to the appraiser took value off of ours because of that. And it was like under the category of like layout or something that was different than all the other comparables. So it's just really cool to, to see that by having an appraisal done when we're just kind of like partial way through the process. But the other thing we did was we did an ARM loan. So it's a five year. So we actually got a lower interest rate than if we would have done a 30 year rate fixed loan. Because in since we plan on leaving in two years, we don't even need to go to that five year mark, hopefully because it will sell. So that was another big advantage is we could take that opportunity and get a better interest rate too over the next two years.

[Ashley Care]

I did the same thing. I did an ARM also. I think people don't like adjustable rate mortgages and they do come with risk, but for projects like this, I think they make a ton of sense, especially now. I don't know about you, but the spread for me was like a full percentage point. I think it's like between a 30 year fixed and an arm. And that matters a lot. When you're holding onto it for two years, it will really make a difference.

[Mindy Jensen]

And you're still getting the 30 year amortization. So your payment is still spread out over 30 years.

[Ashley Care]

Yeah, it works pretty well. What about you, Mindy? How have you financed and do you have any recommendations for financing? Because I think, I guess the question is right like the acquisition is one thing, but then you also have to pay for the renovations. I'm doing conventional and then I'm just going to come out of pocket for the renovations. But how have you done in the past, Mindy?

[D]

I have always gotten either a conventional or an FHA loan and I tell my lender that I'm open to both so that they will run the numbers on both. Sometimes an FHA is better, sometimes a conventional is better. FHA is not just for first time homebuyers. So even though I've done this a bunch, I was. The last house I had was an FHA loan. I like 30 year loans, not 15 year loans because I don't know how long it's going to take me. And I have been looking for my forever home for a long time. I've moved around a lot. I've never in my life lived in a house for longer than six years.

[Ashley Care]

But now you're building it now?

[D]

Now I'm building it. I'm going to build my forever home for that one. We're actually financing it through a line of credit loan against our after tax stock portfolio which also comes with risks. But we are aware of the risks and we are willing to take them. I think the rate there is like 4% right now.

[Ashley Care]

Okay.

[D]

That's what we're paying on the, on the loan.

[Ashley Care]

That's really good.

[D]

Yeah, it's really good. But there's also it, it's adjustable every month and the amount that I can borrow fluctuates with my stock prices.

[Mindy Jensen]

Another option too along those lines is if you have an investment property already, like a rental is getting a commercial line of credit on the rental property too. And that's what we actually are going to use to do our rehab too. So I don't think what we're pulling back out right now is going to cover the whole cost of the rehab. So we'll just use our line of credit, either pay it off over time the next few years or we'll just pay the interest on it and then pay it from our when we sell the property.

[D]

But Dave, you asked about how am I financing the rehab. Here's a fun little trick. Open up a Home Depot or Lowe's or both credit card. That is the store credit card will frequently offer you no interest for 6, 12, 18 or 24 months so long as you are paying the monthly minimum on time every month. The no interest comes with an asterisk. If you don't pay off the entire amount before the promotional period ends they go back to the very beginning and charge you interest on the entire amount for the whole time. So if you can't pay it off before the end of the promotional period, make other plans. But like you, you're coming out of pocket. Well, why come out of pocket now when you can come out of pocket over the course of 24 months?

[Ashley Care]

All right, well, that's very good advice. So last question here. I think this has been a super, super helpful conversation. I think one question I'm imagining our audience might have is this is a great strategy. So is house hacking two different owner occupied strategies? Ashley, how would you suggest to the audience thinking through if either of these are right and, and between these two options, like who is living flipping good for and who is house hacking good for?

[Mindy Jensen]

I would say personality plays a big part in this. Yeah, when someone comes knocking at my door, I am hiding, pretending I am not home. So house hacking would not be for me because of those reasons. But I think personality plays a lot into it. And then your, your tolerance of rehab and then also your, your spouse or your significant other as to their preference. Is living in a rehab and diying it yourself going to cause a lot more arguments and then also just your kids too as to how will they acclimate into. Yeah, living there.

[Ashley Care]

I agree. The personality thing makes a big difference. How would you think this through, Mindy?

[D]

I would say the same thing and add on Live in flipping is great for people who have a project manager mentality and can go with the flow because there is definitely going to be things that do not happen on the timeline that you have in your head. Even after 10, I still have a timeline. And then life is like, oh, really? No. The biggest shift to our timeline for this house was Covid. We were going to be all done in May of 2020 and then March of 2020 happened and we had to homeschool our kids instead and it has just been really dragged out. So being able to tolerate a rehab for a long period of time because you, I don't know if you've ever had this experience, Dave or Ashley, but you call up a contractor and they say I'll be there on Tuesday, but they didn't tell you that it was Tuesday of 37 weeks from now or they just never answer the phone again. So there's a lot of things that, that happen to your timeline that are outside of your control and if you can't handle that, then live in flipping is not for you.

[Ashley Care]

Those are good points. The only thing I'll add to this too is I just think where you are in your investing journey will matter too. Like if you're prioritizing cash flow or appreciation. Like obviously a live and flip isn't going to give you any cash flow and so you're through in a point where you're trying to build cash flow, house hacking might be the option. The other thing is, I think generally speaking house hacking is probably going to be a lower capital investment. You know, not all live in flips. You can get conventional loans for some of them you can. But if you do a turnkey house hack, you know, if you're putting 5, 10% down, you're not doing a major rehab. You could probably get into that a little easier than if you need to fund a down payment and find a way to fund renovation.

[Dave Meyer]

Even if you borrow, that's still money.

[Ashley Care]

Like you need to still figure that out. So just another thing to think about. But I'm super excited about this. I'll keep you guys posted because I again, I'm starting next week and would love to hear Ashley and Mindy how the rest of your live in flips go over the course of your hold period here.

[Dave Meyer]

Thank you both so much for being here.

[Mindy Jensen]

Yeah, thank you for having us.

[Ashley Care]

And thank you Mindy. Appreciate it.

[D]

Yeah, thanks for having me Dave. And any questions, hit me up. I love to talk about this stuff.

[Ashley Care]

Yes, don't ask me any questions because I don't know yet. Ask Mindy. She knows everything. Well, thank you all so much for listening to this episode of the BiggerPockets podcast. We'll see you next time.

[Dave Meyer]

Thank you all for listening to the BiggerPockets Real Estate Podcast. Make sure you get all our new episodes by subscribing on YouTube, Apple, Spotify, or any other podcast platform. Our new episodes come out Monday, Wednesday, and Friday. I'm the host and executive producer of the show, Dave Meyer. The show is produced by Ian K K, copywriting is by Calico, content and editing is by Exodus Media. If you'd like to learn more about real estate investing or to sign up for our free newsletter, please visit www.biggerpockets.com. the content of this podcast is for informational purposes only. All host and participant opinions are their own. Investment in any asset, real estate included, involves risk, so use your best judgment and consult with qualified advisors before investing. You should only risk capital you can afford to lose. And remember, past performance is not indicative of future results. Biggerpockets LLC disclaims all liability for direct, indirect, consequential or other damages arising from a reliance on information presented in this podcast.