Was wondering what method people think is better. BRRRR or flip and sell.
Using the BRRRR method you don't have to pay realtor fees or taxes on the sale, closing closts and all that other extra stuff that can add up to $5k - $10k quick sometimes. You can take out 80% of the ARV without all those extra fees from flipping and selling. Another plus is that in another 5 years you can refi again if you want to.
Was curious on peoples different opinions on the matter.
In my opinion, I'm more a fan of the BRRRR because of the long-term stable cash flow that it tends to offer. Totally depends on your experience and goals though.
@Brandon Ramsay some properties would be a good flip but not a good BRRRR, so just make sure the market rent is there before trying to BRRRR. Otherwise, BRRRR has a lot of tax advantages over flips.
@Brandon Ramsay really depends on your goals.
BRRRR you're looking at long term gains. It takes 5-10+ years to get the return you're looking for. Work up front that keeps paying off in a tax-friendly way. There's also typically less risk as it's a long term investment.
Flip gets you a lot of profit (hopefully) short-term. Uncle Sam takes more of your profit. There’s also no long-term gains.
After doing both, I tend towards the BRRRR strategy.
@Brandon Ramsay I'd say it really depends on the deal. Depends on how much the bank will appraise the house for, how much money you can pull out vs. what the property would sell for. If you have a very good lender, I'd go with the BRRRR strategy.
I have a deal analysis tool that I use that helps me analyze both options and compare. It came with this "BRRRR Deal Package" which consists all of the tools and legal materials to go through the entire deal process. Everything from:
(1) contract a property manager, (2) analyze lenders apples-to-apples, (3) engage your contractor (and I've even included a document for your contractor to use to provide you itemized bids on work - no more guessing what you are paying for), (4) a lease agreement, (5) a "checklist" of business incorporation items to launch your real estate LLC and (7) even a BRRRR deal analysis spreadsheet so you can know right away if you'll be making a great deal.
Let me know if you are interested in the tools and I can share.
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