After buying a $150,000 fixer-upper in Des Moines, IA, in the spring of 2023, real estate investor Jacob Naig made the dubious decision to take his work home with him: by moving into his flip.
For two years, Naig worked, ate, showered, and slept in his own unfolding construction zone. His wife, business partner, and designer, Danielle, lived in a second flip next door, while their 6-year-old daughter, Natalie, popped back and forth.
“My daughter and I lived in the basement for two months, as the upstairs of our home was gutted naked,” Naig recalls. “In our makeshift bedroom in the basement with no windows, we were tested to the outer limits of our sanity during the Iowa winter. We even turned the attic into a temporary bedroom at the last minute, which made things more complicated but spared us hotel nights.”
They had good reason to tough it out.
“It was a financial choice: Living there meant we would be sitting pretty on the $500,000 tax-free capital gains exclusion on a primary residence,” Naig explains. “It also lowered holding costs dramatically—no more supplementary rents or mortgage payments on a second residence during renovations—and put us at the scene early enough to catch crucial problems, such as water damage during storms.”
In the end, Naig’s decision to camp out in his renovation paid off.
“In 2025, we listed for $285,000 and took $280,000 after one weekend of showings, pocketing about $70,000 in profit, all of which was eligible for the primary residence exclusion,” Naig says. “The project’s success was entirely based on the fact that we were living on site. The drawback is the practical life disruption: You move into a dump, endure noise and dust, only to have the bittersweet experience of leaving just as the space hits perfection.”
A wild way to save on flips
Although living in a flip may sound about as soothing as camping in a construction zone, the potential savings are tough to ignore. Between stubbornly high home prices, steep mortgage rates, ballooning construction costs, and slimming margins, house-flipping activity and profits have been dwindling for years. Live-in flips keep the lights on and the ROI in positive territory.
Let’s Make a Game Plan
Boost your investment game with expert real estate insights. We'll keep you up to date on everything you need to know to be the smartest real estate investor you can be.
“It kept costs tight and allowed me to manage the entire process without delays,” says investor Mark Sanchez, who moved into a flip he purchased in Port Richey, FL, for $185,000. Although he endured “showering with drywall dust in the air, eating around power tools, and dealing with constant noise,” he didn’t mind one bit once he sold for $297,000, netting $70,000 in tax-free profits.
The most significant advantage of turning your flip into your primary residence is the capital gains tax exemption ($250,000 for individuals and $500,000 for married couples, provided you live there for two years). Another perk is more favorable home loans. Naig secured an FHA 203(k) loan, which wraps purchase and rehab costs into one mortgage for primary residences; it helped keep interest rates below the traditional bridge loan he would have gotten otherwise.
Another benefit? “You know every nail and fixture by name, and you control the quality,” says Todd Stephenson, who cooked on a camping stove while living in his flip in Chattanooga, TN, for two years. Although he found living in a construction zone a “grind,” once he sold for $326,000, he admits, “the return made it worth every late night and drywall patch.”
“It’s one of the few strategies where a hands-on, budget-conscious approach can actually outperform more capital-intensive methods, but only if you’re scrappy enough,” explains investor Catherine Mack at House Buyer Network. “Many first-time investors underestimate the hassle of renovating a house while living in it.”
And even once the ordeal is over and you move out, you might actually miss the place, now that you've spent so much time there getting it into shape.
“The hardest part is right at the end,” Stephenson admits. “Just as the house becomes exactly how you want it, you hand over the keys and walk away.”
But when asked if he would do it again, Stephenson replied, “I already am.”
Curious to learn more? Here’s a guide to the pros and cons of live-in flips.