First time investor needs some strategic help
Hey all, I will keep this brief. I recently got into real estate investing and have found BP to be a great help. I have a property that I got under contract for what I believe is a great price and would love some advice on how to know when it's best to either wholesale it or keep it and fix/flip it. I'm sure the answer is nuanced and fluctuates in each scenario, but if there are any overarching guidelines or principles that could help, I would love to know that. Appreciate all the free advice on here and hope y'all (see, already fitting in down here) have a good one
#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
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- Austin, TX
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#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
- Investor
- Austin, TX
I’m assuming you’re going to make a lot more more flipping it. But at what expense? Your time is valuable, figure out how much of your time this is going to take. You could made 20k on a wholesale or 50k on a flip, was it worth it if you put in 100’s of hours?
Quote from @Ted Finn:
Hey all, I will keep this brief. I recently got into real estate investing and have found BP to be a great help. I have a property that I got under contract for what I believe is a great price and would love some advice on how to know when it's best to either wholesale it or keep it and fix/flip it. I'm sure the answer is nuanced and fluctuates in each scenario, but if there are any overarching guidelines or principles that could help, I would love to know that. Appreciate all the free advice on here and hope y'all (see, already fitting in down here) have a good one
The answer really depends on what you're trying to accomplish. Wholesaling is a job. When you find a buyer, you receive some cash and you're done. Flipping is a job. You sell the property, receive some cash, and you're done. Buy-and-hold is an investment. The tenants pay off your debt and increase your equity, they put cash in your pocket, the property appreciates with the market, and you get tax benefits.
So, are you looking to build wealth or just make quick money?
Can my answer be a little bit of both? I guess I thought of it as using wholesale/flip to generate that income to use on long term holds and investments
I think if you are trying to be a real estate investor you need to ask yourself what strategy best gets you to that goal. How much could you make flipping it or wholesaling it versus what is the cash flow as a rental. If you have other potential deals in the pipeline especially multifamily deals I would look to wholesale/flip it and use the cash to get something more lucrative for buy and hold. If it would cash flow well, you do not have or do not want to go look for more deals and want to be an investor I would rent it out and see where that takes you.
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Real Estate Agent Iowa (#S68688000)
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Flip it when 2 things happen:
1 - Your total cash flow equals the DP (which should be all the cash you put into the deal). This is when you have recovered all of your cost, and everything past this point is pure profit...unless you have to come up with more cash.
2 - When the appreciated equity equals the paid for equity (DP).
At this point, when BOTH of these events have happened, in any order, you have reached the maximum potential for that property...and you should sell. From that point forward, you start to lose money...and will continue to do so.
It all depends on what you are trying to accomplish with your real estate business.
Do you need cash to pursue other opportunities? Are you interested in working on this deal for several weeks/months while you fix it for a flip?
If you are getting consistent deals/leads you may want to flip this quickly. The more closed transactions you get the more experience you gain. The more knowledge you have the more comfortable you will become and the more diverse your business will be.
However, if you are not getting leads consistently you may want to work on this one and flip it. Afterward, you can take the profits and reinvest them in your business. Maybe start a website or pay for marketing. Regardless, I think the end goal should be to grow your business and you can only do that by increasing your leads.
My name is Joe O. and I invest all over South Carolina. I fix & flip, wholesale, buy & hold and have several STR. Call me anytime 803-201-9137 www.palmettolandbuyers.com
Hi, I agree with your above statements. I just moved up to South Carolina from West Palm Beach Fl. into a very rural area, Greenwood, hoping that I could start an investment business of building homes and immediately selling. I also became a broker up here too. Now I am scared to death, the housing market in SC is not a great place for high investment. I was hoping to build two homes paying cash, one would sell for $550,000 the other for $350,000 but now am not sure I would get these amounts as the market really seems to be crashing here in real estate. The local people here don't have that kind of money and must take out a mortgage. Mortgage rates are going thru the roof and they are saying they will increase. I really don't know what to do. Should I go forward knowing there will be very little income profit? Any advice?