As emphasized before, your first “investment property” should be your home. One of the major reasons is that owner-occupied residences are the easiest to finance.

Another big benefit is your capital gain resale profit will be tax-free up to $250,000 (up to $500,000 for a married couple filing jointly in the year of home sale). Internal Revenue Code 121 requires principal residence owner-occupancy for any 24 of the 60 months before selling for tax-free profits up to the limits.

Purchase Bob Bruss reports online.

You can use IRC 121 over and over again without limit, but not more frequently than every 24 months. If you are willing to live in your home while it is being renovated to increase its market value, you can earn up to $250,000 (up to $500,000 if you’re married) tax-free every 24 months. Please see my special report, “Everything Homeowners Need to Know About the New $250,000/$500,000 Home Sale Exemption Rules,” for details.

There are so many ways to finance the purchase of your home, I don’t have space here to explain them all. My personal low-cash favorites include (1) lease-options, (2) seller financing, and (3) FHA, VA and PMI (private mortgage insurance) mortgages. More details are in my special report “Secrets of Buying Your Home or Investment Property for Nothing Down.”

As emphasized throughout this report, even when buying your personal residence, look for profit potential. If you purchase a home in tip-top near-perfect condition, it has little profit potential. That’s the way to SELL property, but not the way to profitably buy it at a bargain purchase price.

Following the old Nickerson formula, look for homes (and other investment property) “with the right things wrong.” Cosmetic improvements are the easiest and most profitable. Aim for $2 of increased market value for each $1 spent on improvements.

Profitable improvement examples include paint (the most profitable improvement of all), landscaping, new light fixtures, new carpets, and other improvements which add more value than they cost. Try to avoid property in need of unprofitable improvements, especially if the work won’t show and add market value, such as foundation repairs, new roof, and new heating and air conditioning. Kitchen and bathroom remodeling, by the way, rarely adds its cost to the market value of most homes.

Financing the acquisition of pure investment properties, such as apartments, offices and warehouses, is more difficult than financing owner-occupied homes. That’s why I suggest buying investment property with seller financing rather than getting new financing from an institutional mortgage lender. By showing motivated property sellers the advantages of carrying back a first or second mortgage for your purchase, you gain easy financing while also benefiting the sellers.

(For more information on Bob Bruss publications, visit his
Real Estate Center


What’s your opinion? Send your Letter to the Editor to

Show Comments Hide Comments


Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Thank you for subscribing to Morning Headlines.
Back to top
Only 3 days left to register for Inman Connect Las Vegas before prices go up! Don't miss the premier event for real estate pros.Register Now ×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription