Should I Fix and Flip OR BRRRR

2 Replies

What's up BP!

I mostly do wholesaling and rentals w/ some flips and retail deals here in San Diego... however easy cosmetic deals I flip or BRRRR. As we get further and further in this market cycle I am wondering on every flip/BRRRR which avenue I should go down. Take the flip profits now, or BRRRR with a great interest rate and some cash flow... doesn't keep me up at night bc both options are great, however I want to maximize my time and profits.

For any multi-units I am heavy in the BRRRR category, but I have a couple San Diego condo deals I am in contract on now and curious the thoughts from BP on which route is better... and I typically don't like holding condos long term due to the HOA and the low ceiling on cash flow, but another perspective I have heard is how easy they are as a rental.

I got in to this for long term wealth #1 and short term profits #2... just an FYI.

Condo #1:

*This deal is under contract and ready to close in a few weeks using HM at 85% of PP and 100% of Rehab with 9/2.

PP: $155,000

Rehab: $30,000 - $32,000

ARV: $260,000 with upside as nothing has sold in building in 2 years

HOA: $300 a mo

Rental: $1750-$1800

PITI w/ HOA from Refi ~ $1,500

Minimal Vacancy

BRRRR Pros: In a predominantly rental area, can 100% BRRRR and hold for $250-$300 a mo cash flow.

Flip Pros: I'm licensed so it'll only cost me about 4% cost of sale

 Condo #2: 

*This deal is in negotiations with bank for Short Sale using HM at 85% of PP and 100% of Rehab with 9/2.

PP: $150,000 - $200,000 (Discrepancy because we are negotiating... starting at 150k, closer to 200k will lean me towards flip vs BRRRR)

Rehab: $28,000 - $30,000

ARV: $295,000

HOA: $388 a mo

Rental: $1800

PITI w/ HOA from Refi ~ $1,600 or less, depending on purchase price/refi price

Minimal Vacancy, Brand new hospital being build walking distance, less cash flow but better area than Condo #1

BRRRR Pros: In a predominantly rental area, can 100% BRRRR and hold for $200-$300 a mo cash flow.

Flip Pros: I'm licensed so it'll only cost me about 4% cost of sale

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TL;DR - Are condos good for BRRRR or better to flip and keep my rentals as multis or high cash flow SFR's

Updated almost 2 years ago

$250-$300 a mo cash flow before expenses (Vacancy, Repairs, Maintenance) albeit all my rentals are fully remodeled and in very low vacancy areas.

Cash flow is not equal to rent - (PITI + HOA). There is vacancy, maintenance, cap ex, and misc. So both cash flow projection are at a minimum exaggerated and possibly cash flow negative (my conservative numbers would show both these as cash flow negative).

Does this mean I am against the BRRRR option? Not necessarily. In the long term San Diego will have long term appreciation above the inflation rate and you listed as your #1 goal long term wealth. Depending on what your view of the long term outlook for San Diego RE would dictate what is the correct choice for you.

Good luck

I understand that, have other rentals and am aware of the expenses... however with completely remodeled properties, especially with a condo, I'd imagine expenses are very low. I should have included that though, so I will make an edit. Thanks