I always hear 5 years is a good rule of thumb to flip a property for a profit. Is that accurate?

What if you’re in a particularly hot area (as an example, we’re in Westfield, NJ where homes appreciated 20-30% in the last year and are at an all time low for inventory). Does that change the calculus at all, or just generally impossible to predict so assume 5 years?

We’ve done some work to the house as well if that makes a difference.

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Last few years were exception. Real estate probably is sideways for next few years with these interest rates and affordability.

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I grew up in Westfield. Now live in Garwood. It is a very hot market and generally high end. People pay a premium to live there. It’s a safe bet overall that you’ll turn a profit.

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Investment or personal property?

If you already own it, you should be able to take actual costs and see when you break even.

Going to be highly dependent on the area. If supply is still low, it may be less than 5 years to break even.

If you sell it in less than a year, then you pay short term gains as the property is considered “inventory”. I’m not sure if this applies to a primary residence or not.

5 years is typical because appreciation tends to be 3% to 5% annually, and there are costs associated with buying and selling. That being said, if you’re in a hot market and see 20% (or more) appreciation in less than 5 years, then it may be worth shortening your timeline.

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