When you go over budget on your first SF flip: brrr or sell?

Question

Between a bad contractor, going over timeline and over budget, and some major unexpected issues we are well over budget on our first SF flip. We have a lot of money tied up in this house. Unfortunately we are now trying to sell at a bad time too. Do we try to rent and hold (BRRR) or sell? How would you make that determination?

Jon Reed · Answer

Do the math, determine your cash needs for further investing, and find out which method makes the best financial sense for your current situation.

Jaron Walling · Answer

This is a numbers game. Did you run the numbers for cash-flow as a rental? You should have some options and worse case you hold till the spring, unless hard money is killing you.

Nathaniel Hovsepian · Answer

Do you have more money left over for continued investments?

Will the property cash flow if you were to take a mortgage out on the place?

Have you analyzed a rental property cash flow before?

Here is an article I wrote specifically about analyzing a rental and all of the things that I consider.

https://www.biggerpockets.com/blog/property-analysis-good-investment

Depending on your answer to the questions above you can determine your situation going forward. If the house will cash flow and you have other money saved up that you can put towards your next purchase then I would lean towards renting it out. Now, if it isn't going to cash flow, or you don't have any other reserves, it might be best to get it sold and move on to the next one.

When you go over budget on your first SF flip: brrr or sell?

When you go over budget on your first SF flip: brrr or sell?

Most Popular Reply

3 Replies