I'm currently flipping single family homes taking my profit and moving it into the next one. The goal is to pile up enough cash to buy large value-add multi-family, storage units, mobile home parks, not exactly sure yet. I'm on my way probably a couple of years away from having about a million dollars to put down on something. Hopefully sooner! I don't need the flip profit to live on so is strictly for reinvesting.
I'm not really interested in owning a bunch of SFH rentals which is why I haven't been doing the BRRRR method. Am I thinking wrong here? Should I be holding onto these flips??
Example flip I have coming up:
$95K cash purchase
$35K Renovations & Closing Costs
*Sale Price $175K
Rent would be about $1200/month. Do I BRRRR this or sell and take my profits?
I'm sure you'll get better insights in to this, but since it's been quiet for a few days here are some things I would consider:
- Opportunity cost. If you flip and sell, are you able to quickly put *all* of that money back into profitable flips (or other investments that are more profitable than keeping the rental)?
- Re-fi rate: If you hold, do you have a lender that will give you a good amount of cash-out, and is it at a good interest rate?
- HELOC: I've found one credit union here in Utah that has good terms on rental property HELOCs. That could be a good compromise between holding and selling; you don't have the high closing cost of a re-fi, you can take the cash out if you need to to jump into a new great investment, but put it back when you don't need it.
And of course, how would you rather spend your time? Assuming you have lots of flips available to you, you could focus solely on that if that's your jam, or you could slow things down a tad and BRRRR, buying fewer properties and spending part of your time (and capital) being a landlord (or managing your property manager). I would probably hedge my bets: sell the ones that you can get the most profit for, keep the ones that are in areas with more potential appreciation.
@Aaron Farr If you dont need the cash and dont want to have the residual cash flow now then go for the big take down of a multi unit something down the road. It really comes down to preference. I think you are fine with the strategy you are employing.
@Eric Gardiner thank you for your response. I agree with what you said and have decided to sell once complete. Thanks!
Hi Aaron, I saw your post and often ask myself the same questions. I think it depends alot on the market you are in. How long it takes you to rehab, how long it takes you to sell a property, and likewise on the rental side. If you can rehab quick, rent fast etc
Here, the avg days on market for home is about 5-6 months. so im waiting 5-6 regardless with my money tied up in the property.
And there are a TON more houses here that make more sense as a rental than a flip. Can't get enough value out of many properties to make a good flip opportunity
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