Flip or BRRRR - need help deciding which exit strategy to choose

3 Replies

Hello BP fam!

I'm a beginner investor and just purchased my second investment property in the Midwest. I am having difficulties figuring out what my exit strategy would be. It started out "wanting" this deal to become a BRRRR but the numbers don't make sense. Flip is the more logical thing to do but because of the "trendy" location, many investors I speak to tell me that it might make sense to hold it for appreciation. There's so many things to think about when choosing one or the other: cap gains tax, holding costs, closing costs, selling costs, marketing cost, PM fees, etc. Can the seasoned vets help analyze this deal? Many thanks!

Location: Indianapolis

Purchase price: $125k

Closing: $1,200

Reno: $78k

Projected Reno time: 3 months

Holding costs: insurance $350 (3 months), taxes ($150), utilities ($500)

All in costs on projected timeline: $205,200

ARV: $260k

If I BRRRR:

Rent: $1,500

PM: $150

New Assessed value for tax: $450/month (2%)

Please help!

@Christina Kim Hello, first I would double check all of your numbers to make sure they are accurate. For example, what your rent would be after renovation. Have you verified this with a couple PMs? and also taken a look on Zillow/Craigslist to do rental comps.

Also where exactly is this property? Fountain Square or something like it? 

what level of rehab do you plan on doing? Is it just cosmetic? or down to the studs?

I buy and hold utilizing the BARRRR strategy in and I do SF flips in Indy. I might be able to give you some more feedback with more details to go off of. 

Best of luck!

@Aaron Cullen the rent might be on the higher end. This is in Bates Hendricks and I've talked to many investors in that neighborhood. The ARV and rents are prospective but the rest of my costs are actual. I'd be more than happy to share anything else. Hopefully by some of your insights I have a better idea if this is a brrrr or flip. Thanks!

Do you know approximately what your operating expenses would be? Without seeing those, I couldn't tell for sure (although obviously, they're just an estimation). But at the rent/cost, I would think it's a bit tight and would probably lean toward flipping. That being said, I would also be sure to double check your ARV and renovation estimates.