Flip or BRRRR
Member since 2025 · 3 posts · 5 votes
Flip or BRRRR
Most Popular Reply
Jaron WallingPro Member
Rental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes@Adam Copley We're investors in the mid west and I was in your shoes about 4 months ago. I completed about 20% of work on our property that's now listed for sale. Significantly less work than I've done on previous properties.
If you're aiming to flip you need a new roof. Unless that roof is < 5 y/o (verified with inspection) every buyer in this market will question it. Buyers are questioning everything so get prepared for it. Buyers are questioning new basement flooring jacks because "they don't match the old ones". We're providing an initial home inspection and sewer inspection/jetting video. It's a $1000 worth of inspections... for free. Unless the markets really heat up in the spring you'll probably want to provide these reports to stand out.
If you're aiming for a flip keep the BRRRR strategy in the back of your mind. Stay on budget with the flip BUT leave out expensive projects like a roof, windows, or major mechanicals that still have useful life (for a rental), so you can pivot into a rental. Every BRRRR could be a flip if especially if you're doing 50% of work. You're labor costs should be way less.
The labor costs for the property we just finished was $27k. These are 2bed, 1bath, 1car garage properties. We have completed BRRRR deals with a new roof for less money in the past, but it took 7 months to get done. It's exhausting but the sweat equity was created. That plan is not scalable with 9-5 jobs and kids, but if we can do it you can too. Cheers man.
9 Replies
- Realtor · Oklahoma City · Member since 2020 · 258 posts · 139 votes10mo
@Adam Copley good post.
It really depends on the deal & your goals. If you flip & sell under a year - any profit will be taxed as short term capital gains at your ordinary tax rate (marginal to your overall income). So adding that on top of your year end salary - you'll have to plan to pay x amount back when doing taxes. It can generate cash to turn into a new deal & maybe the rental return numbers are not as good as like, I'd consider selling.
If it works out as a LTR then it may be worth keeping. LTR's are the most predictable way to build wealth over time & has many benefits. Instead of selling you refinance & the proceeds are tax free & can follow the BRRRR strategy to keep things moving. Yon good deals you'll get money back to fund your future deals & get to keep potential equity/profit in the deal. Usually if refinance, I'd recommend holding longer as the costs associated can be decent. At least holding an asset for over 1 year you can then sell at a long term capital gain rate for taxes anywhere from 0% - 20%
If you keep, the learning doesn't stop - then you get into leasing, property management & ongoing operations.
If you still want help/guidance - I can hop on a call & go over more. From a general investor strategy session to commercial 30 year fixed financing & Fix & Flip Loans (up to 90% of purchase & up to 100% of rehab - not to exceed total of 80% of ARV) & more.
- 10moJaron WallingPro MemberRental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
@Adam Copley We're investors in the mid west and I was in your shoes about 4 months ago. I completed about 20% of work on our property that's now listed for sale. Significantly less work than I've done on previous properties.
If you're aiming to flip you need a new roof. Unless that roof is < 5 y/o (verified with inspection) every buyer in this market will question it. Buyers are questioning everything so get prepared for it. Buyers are questioning new basement flooring jacks because "they don't match the old ones". We're providing an initial home inspection and sewer inspection/jetting video. It's a $1000 worth of inspections... for free. Unless the markets really heat up in the spring you'll probably want to provide these reports to stand out.
If you're aiming for a flip keep the BRRRR strategy in the back of your mind. Stay on budget with the flip BUT leave out expensive projects like a roof, windows, or major mechanicals that still have useful life (for a rental), so you can pivot into a rental. Every BRRRR could be a flip if especially if you're doing 50% of work. You're labor costs should be way less.
The labor costs for the property we just finished was $27k. These are 2bed, 1bath, 1car garage properties. We have completed BRRRR deals with a new roof for less money in the past, but it took 7 months to get done. It's exhausting but the sweat equity was created. That plan is not scalable with 9-5 jobs and kids, but if we can do it you can too. Cheers man.
- 10moJaron WallingPro MemberRental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
@Adam Copley "leave out expensive projects like a roof, windows, or major mechanicals that still have useful life (for a rental)"
Better wording is stay flexible on these big ticket items if you pivot to a rental. Most rental investors try to avoid big mechanical expenses for the first few years. Let the tenants pay for it.
For a flip you'll likely need to replace these.
- Member since 2025 · 3 posts · 5 votes10moThank you Jaron! Any insight on the quality of finish I should do given BRRRR vs flip quality of paint/hardware/bathroom/kitchen are vastly different? Thanks!
- 10moJaron WallingPro MemberRental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
Quote from @Adam Copley:
Thank you Jaron! Any insight on the quality of finish I should do given BRRRR vs flip quality of paint/hardware/bathroom/kitchen are vastly different? Thanks!From our experience with renovations "flipping" is an all encompassing job. You can't cut many corners. Other investors with better contactors will put a better product on market. Don't shoot yourself in the foot. If you're doing 50% of the renovation (saving $$$ on labor) add some custom touches to stand out. Doesn't have to be expensive. You can't go cheap on kitchens and baths though. That's game over for a flip.
For a BRRRR type deal - honestly I'm cutting corners within reason. If the roof isn't leaking and looks okay I'm not spending $14k replacing it. If the garage is functional but has no power or door opener I'm not addressing that. It's a glorified storage space for future tenants. Same for unfinished basements. I'm strictly focused on electrical, plumbing, water heaters, HVAC tune ups (hopefully not a replacement) and any safety issues. I wouldn't buy the most expensive materials. Sherwin Williams paint (so you can remember color codes), LED lighting, flooring, simple repairs (less future headaches), new door locks, and electrical panel inspection (label switches!) are my biggest concerns with BRRRR.
Every investor has "standards" for flips and BRRRR. Life is a journey and I think that standard is always changing. Until you buy the first deal, sell something, or see cash-flow it's hard to figure it out.
- Real Estate Agent · Triad North Carolina · Member since 2025 · 50 posts · 13 votes10mo
Really appreciate you breaking this down a lot of good insight here.
The point about buyers picking apart everything in this market is spot-on. Having the roof situation verified and offering those upfront inspections definitely seems like a smart way to stand out.
Also like the reminder to keep the BRRRR pivot in the back pocket when the numbers allow. Staying flexible on exit strategies seems more important than ever.
Thanks for sharing the experience helpful seeing how others are navigating it.
- 10moDrew SygitBusiness MemberProperty Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
How likely are you to find a deal like this again and when?
Why can't you cashout refi to get your funds back out?
If you sell, where would you reinvest at same or better return if you rented it out?
Logical Property Management4.9465 Reviews - 10moAshish AcharyaBusiness MemberCPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
What Chase said here is spot on, especially the part about flips being taxed as short-term capital gains (which really just means they’re taxed at your ordinary income rate) if you sell in under a year. That’s a big deal when you layer that profit on top of your W-2 income.
From a tax perspective, the tradeoff looks like this:
• Flip: the $60K gets taxed like regular income, so plan for a heavier tax bill. Good for building cash, just make sure you’re running the after-tax numbers.
• Rent: depreciation can wipe out a big chunk of your taxable income, so your $400/month cash flow may be almost tax-free. And if you ever refinance, those proceeds are tax-free too.So it really comes down to whether you need cash now or want the long-term tax benefits.
Good luck, and happy to connect if you want to talk strategy.
INVESTOR FRIENDLY CPA®4.9242 Reviews Hey @Adam Copley, welcome to BP!
Here’s a clear, investor-minded way to look at it — without sugarcoating — so you can choose the path that best builds your portfolio and your cash position.
First, understand your starting position
- You have limited cash.
- You’re doing 50% of the rehab work yourself, which saves money but extends timelines.
- The property needs heavy rehab, so holding costs & surprises matter.
- Your exit choices:
✔ Keep as a rental = ~$400/mo cash flow
✔ Flip = potential ~$60k profit (before taxes)So the real question is: What does your business need most right now — cash flow or capital?
Option 1 - Hold as Rental ($400/mo)
Pros- Start building long-term wealth.
- Tenant pays down your mortgage.
- Appreciation + tax benefits.
- Build passive income foundation early.Cons
- $400/mo is good, but slow to build deployable cash.
- Cash is tied in the property + rehab.
- You slow down scaling your investing business (BRRRR only works if you can cash-out refinance successfully).
- Because you’re doing 50% of the work, your timeline is longer → rental cash flow starts later.This is the long-term wealth play — but slow.
Option 2 - Flip ($60K profit)
Pros- Gives you instant capital to reinvest.
- $60k can potentially fund:- Your next flip
- Your next rental
- Down payment + rehab for multiple cheaper properties- With more cash, you rely less on loans and qualify for better terms.
Cons
- Taxes will cut the $60k (short-term capital gains).
- No ongoing passive income.
- Market risk (ARVs changing, longer DOM, buyer financing risk).
- More labor up front.This is the business-growth play — fast capital injection.
The Strategic Question...
👉 Is your goal to build wealth or build a business?
Most new investors with limited cash benefit more from:
Flipping early → Building cash → Then keeping rentals
Why?
Because cash is the oxygen of real estate investing.If you lock up all your money in your first rental, scaling becomes painful — slow, frustrating, and dependent on strong appraisals/refinances.
With $60k cash, you could:
- BRRRR a cheaper property
- Do 1–2 more flips
- Buy a small portfolio of rentals
- Increase liquidity for financing & safetyIn other words… the flip gives you options.
A Hybrid Thought...
If the ARV supports it, you might be able to flip and keep it:
- Do BRRRR
- Refinance after renovation
- Pull out most of your money
- Keep the cash-flowing assetBut that only works if:
- ARV is strong
- You leave little cash in the deal
- Rent covers DSCR requirementsIf your cash-out refi would leave you with negative cash flow, then holding doesn’t make sense.
Since you’re:
- New,
- Low on cash,
- Doing heavy renovation, and
- Staring at a $60k lump-sum opportunity,
- the stronger financial move is usually:Flip the first deal. Build your war chest. Then buy rentals from a position of strength.
$400/mo cash flow is great — but it would take over 12 years to equal $60k.
And with more cash, you can buy better rentals that produce more cash flow later.
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