Hello BP, I've recently quit my high paying job to pursue REI full time. I've read a lot of blogs and strategies to follow and I've reached a conclusion on flipping and BRRRR as a good combination for building wealth in real estate. My wife and I have savings which we are using to sustain us until this new path picks up, we are fully committed to following this path for success. My question is, should we focus on flips year one and start BRRRR on year two? I believe that is the best idea because we can get "immediate" cash when we close on the flips (for income and saving to invest back in), as oppose to gradually building cash flow on the BRRRR. Or can you also get "immediate" cash at closing doing BRRRR?
P.S. I spent an average of 30 mins a day with my wife and kids, after 18 years of it increasingly getting worse, we decided it was enough. It was time to pursue REI for my health and the well being of my family.
Thanks in advance
Originally posted by @Joel Parrilla :
My question is, should we focus on flips year one and start BRRRR on year two?
Nothing wrong with having a game plan, but be open to it changing, whichever route you decide is going to be your game plan. Nothing is set in stone.
It appears as if a lot of people don't REALLY know what they're getting into, until towards the tail end of the reno.
"Hey Chris I thought I was going to BRRRR that property we talked about 7 months ago, but with the final numbers we were looking at it made more sense to sell it, so basically I ended up flipping it, and that's where my down payment came from on this next one."
"Hey Chris I thought I was going to flip it, but the numbers worked really good as a rental, so now I'm renting it out and need to refinance it."
I hear BOTH of those all the time.
I thin it's because the only thing we ever really know about a projected renovation budget, is that it's way the heck off. Maybe way high, maybe ridiculously low, but folks rarely seem to get them spot on.
@Joel Parrilla Both are very capital intensive, but flipping for income is probably the best way to make an income. Refinancing the BRRRR with no income will be nearly impossible if you're just starting out. Keep in mind that you'll also be looking at 40%+ income tax on flips so plan accordingly.
You mention using savings to get by while you get started. Are you also using savings to fund the flips?
Why not just find a job with better work/life balance while doing real estate on the side? Having steady income will make your journey so much easier.
@Chris Mason thank you for your advice. As I've heard Brandon Turner mention often time, is all about laser focus, know what you want to do and stick to the plan. I won't be all over the place in what I do, I'll master an niche and then add another. Thanks again for your input.
@Jason D. Thanks for the advice on this, I can see the downside to not having a 9 to 5. I will consider it, I can start a "job" quickly if I really need to. I know there is a considerable chunk on income tax when flipping and personally in the beginning is ok, we all pay something to get into this life changing path. Again thank you for the advice, I'm always open to others advice.