What would you do? Buy and hold or flip?

Question

I'm curious to see what other people would do in my situation. Actually I'm not 100% sure what to do so I would like others opinions.

We finally got to a point where we can pull $70,000. cash out of our primary home.

I was thinking I would buy a cheap house, fix it up and rent it out, then get a loan on it to do another, and just keep going from there until I had all the rentals I needed.

Option two would be to buy cheap houses, fix and flip them and after I had enough money to pay cash for the rentals just buy one say every two or three flips. No loans, I could own them all debt free.

I have my own workers for most of the work so fixing them up would cost me a lot less than hiring another contractor.

Thank you in advance for your input.

Walter Key · Answer

In short...both. Depends on the market, the property location, etc. For example, I have some buy and hold rentals in Nebraska that do very well. However, I've relocated to FL and now I'm flipping because there is so many good deals in this niche right now. Occasionally I might find a really good deal that's also in a great neighborhood and I think it would be an awesome rental. In that case, I'll rehab, refinance, and hold as a long term rental. The most important thing is what makes the most sense to you and what you're comfortable with as an investor.

Bryan O. · Answer

Hi @David Soest. There's some great advice already. Flipping is a job. Holding is an investment. That said, if you already have the crew to do it you should do both. Some properties make a great rental. Some make a great flip. If you are already in position and have the time for the extra job, flip away while saving the cream of the crop for investments!

Best of luck and happy investing.

Joshua D. · Answer

I would absolutely do both but start with number 1.

Use the BRRRR plan as you described until you have the rentals that you want.    ( let's say 15 properties). Now you have a decent amount of cash flow comming in, use that to pay off the smallest morgatage, or highest interest loan.

While you are doing this (you still have the original 70k that you have been getting out of each rental (paying off loans) you can keep flipping to pay off even faster.  My guess is that it will take you half as long to have free and clear properties if you leverage first to get cash flow and then pay them down than it will to save up and pay through flipping.

You could also do this in smaller hunks. Buy 3 rentals then flip to pay them off, buy 3 more, flip to pay them off. If you are debt adverse this might be a good plan.

Sounds like you have some awesome leverage capabilities with that crew of workers.  That will be awesome!

Derek Brandi · Answer

Hello David,

I am new to real estate investing myself. I have listen to many audible books and have heard about all the creative ways to make money and they all sound so appealing. I only bought one investment property so far but it cash flows nicely. Once I got into it a opportunity to be partner in a million plus apartment complex came up - it took a lot for me to say no because it looked so good on paper. The reason I say this is when I started in December I made a plan. I typically invested in the stock market 10k a year and after so many years of the roller coaster I decided that instead I would invest in single family homes, duplexes and triplexes using my yearly stock market money and cashflow from rentals.

I only post because I had to walk away from the deal because it didn't fit the plan I set up and being new to the game I feel until I get x amount of units under my wing and more expericance that I should stick to the plan.

I have had a lot of friends make good money flipping and I have some who worked there butts off for 14 cents an hour. When you flip a house you cap your profits at the point of the sale but when you buy and hold you create income as well as increase your net worth.

I am in no way qualified to give advice but just some of my thoughts from another newbie!

David Soest · Answer

Thanks for the advice everyone.

I think I will just have to take it one property at a time and do what makes the most profit at each step.

What would you do? Buy and hold or flip?

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