When to turn flip into a rental

Question

How long would you typically wait for a flip to sell before deciding to potentially refinance and keep it as a rental. Listed a flip in early December and although it has received some attention (atleast 1 showing a week) there has been just 1 low ball offer. The house has been remodeled pretty well with an open concept, granite counter tops etc. I know that the time of year was not the best so that maybe a factor as well. It will cash flow about $100-$150 A month.

Kwame Darko · Answer

@Brendan Lawrence @James Gleeson @Jaron Walling @William Joseph Thanks for all your responses. My goal is primarily buy and hold but made the mistake of taking on too much and doing both. This flip will actually sell for a loss since I did a million things wrong but it was a good a experience. I was successful on my first flip so I thought the second would be a cake walk. Even though this cash flows, it doesn’t offer a good cash on cash return but in hind sight wouldn’t mind keeping it and starting over or selling, taking a loss and again starting over.

James G. · Answer

@Kwame Darko It really depends on the overall situation. Without having too much context, I would say if the loan is approaching its maturity date, and you don't have much hope of selling the home within that time, your options are to either renegotiate with the lender, or refinance the property. If the property is going to cash flow, then it looks like you're not going to lose either way on this one - you are fortunate! Hope this helps

William Joseph · Answer

I think you need to put it in context with your business model. Are you a flipper and is 100 percent of your capital tied up in this deal? If so, you need to sell it so you can move on to the next deal. If its not going to substantially prevent you from operating in the future then - sure keep it as a rental.

Whatever you do, make sure ego doesn't play a part of it. The mentality of wont take a loss is great in theory but a small loss on one deal to take the money and buy another deal where you will make money is the smarter play.

Jaron Walling · Answer

Congrats on have multiple exit strategies. That's going to save your a** if it doesn't sell. I'd wait it out till March (if you can) and see what offers come in. You could start prepping the lease the rental documents in the mean time.

Brendan Lawrence · Answer

Hey Kwame, it's a hard place to be in. do you think you could find a short term renter? maybe thru the spring, so you can put the house back on the market come "buying season". for me if i was in your shoes, that's how i would go about it. however a few things that are variables, what are your current financing costs? if it's expensive hard or private money refinancing as soon as possible might be your best chance to wait it out. you could also do short term rental like an air bnb if your locality allows it, this will allow you some income while also being able to show it still and you'll have the extra benefit of it being "staged" which might help in selling it. Good luck my friend!

When to turn flip into a rental

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