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A “serial home seller” is one who buys a house, moves in , repairs it to increase its value, sells at a tax-free profit up to $250,000 ($500,000 for married couples), and then does it over again. Thanks to the 1997 Taxpayer Relief Act (or, Internal Revenue Code 121) investors can create a profitable home fix-up business with a tax-free “payday” every 24 months. Below are two examples of people who became serial home sellers.
Suzanne Brangham (from her book Housewise)
Also, see my Amazon book list Safest Ways to Invest in Real Estate.
Suzanne was looking for work in San Francisco when she discovered that there were 25 other people competing for each available job, some willing to work for peanuts just to have a view of the Golden Gate Bridge. She didn’t want to work for peanuts. At the same time, she was looking for a place to live. She found a dilapidated old apartment house in a well-to-do neighborhood where you pay 4 times the price for 4 times the view. They were advertising apartments for sale or rent.
Suzanne made an offer to the sales manager that in lieu of paying the $800 per month rent, she would renovate the 2 bed/2bath apartment, spending the equivalent of one year’s rent, $9,600, in labor and materials. She also requested a year’s lease option, an agreement to rent with an exclusive option to buy at anytime during or at the end of the year. The asking price was $45,000. The sales manager agreed.
The job was done in four months, and at a party she was hosting, someone offered her $85,000 for the apartment. She exercised her option to buy the apartment, then sold it for the $85,000. Then, she contracted to buy a second apartment from the same manager. She put 10% down no a 4 bed/3 bath $90,000 apartment, and used the rest of her earnings for renovation. When the renovation was done, she had an offer for $140,000.
From that auspicious beginning she went on to buy 71 more houses and apartments.
Ruth Donohue
Times Online, in “Confessions of a Serial Home Buyer,” interviews Ruth Donohue, who has gone through the cycle several times and says that she does it more for the joy of the process and a love of the challenge. She is able to instantly spot a house with potential and visualize how the renovated home will look.
Ruth’s son Nick is also catching the bug. When they drive by a house, Nick will point out that the roof line just doesn’t look right. “Give me a boy until he’s five and I’ll show you an adult serial home renovator,” she says.
Husband Kevin sums things up by saying, “The family know they’ll always have a roof over their heads, they’re just never sure which roof it will be.”
Getting Started
Suzanne Brangham encourages anyone to join her in her chosen field, saying, “Home wrecking (house renovation) is for anyone who wants to begin marching down a delightful path toward security strewn with appreciating assets. Whether you want to sow the seeds of an empire or simply start a little venture of your own, what could be more natural than buying, renovating, and selling houses?”
What could be more natural indeed.
Thanks to Connie at conniebrz.com for her re-review of my book!
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