4-Plex Should I fix and flip or Refi and Rent?

6 Replies

Hello, 

I am looking at a 4-unit property and would like to know the thought of some seasoned vets out there. I am between fix/flip or BRRR and I am not sure if I should make a decision now or leave my options open as the rehab process goes along and decide when it is finished.

(1) 2-story building

4 units - each about 1200 sqft 3/2 no garage

0.820 acres

ARV ~$625,000

List Price $450,000 - may have some wiggle room here

Rehab $80,000

Total cost $500-530k

Comps are listed for $625k - 675k

I am kicking around the idea of adding another 4 units to the property for a total of 8 units because there is plenty of space available if i mirror the existing building layout. This would definitely change the ARV and cost of the project.

Would a property like this be feasible as a flip? Are there still investors out there looking for a turn-key rental property? 

I get the feeling that something like this would be best to hold on to for a few years if I can do a cash-out refinance when the rehab is done and it is rented out. If I did BRRRR this, I could roll into another property relatively quickly If I were able to recoup my cash and pay off investors.

Please let me know what you think!

Honestly, the decision is based on your goal. Are you looking for long term cashflow or a quick way to build capital. I would think about that first then proceed with research on rental market and selling market. Investors are always looking to buy multi units, especially good cash flowing units

Always good to have a couple exit strategies, which is sounds like you have.  I agree with @Khanesia Washington that you should get clear on your goal in order to help you decide which option will be best for your specific business plan.   Either way, sounds like there's a lot of great options with this property - good luck!

Thanks for your response, I am leaning heavily toward keeping it for cash flow for a few years.

For those of you that have done something like this, is there a way to rehab and add units without dramatically increasing the property taxes?

I am no veteran investor by any stretch, I would just like to get the gears moving in the brain. Plus I am sure you already know this. If you were to BRRRRR this deal with a LTV of 70-75%, that would leave you with a big chunk of change left in the deal. Like a cool $30K Now are you funding this on your own? Got investors? If so, when are they expecting their money back? If this was all of your money, and did not have to worry about paying anyone back besides maybe the bank on a traditional loan, the question is how much monthly income compared to monthly expenses. And if you are okay with having that extra 30k tied up in the deal then it might be a good deal for you. this is just one way of looking at it. What do you think? Let me know if I am wrong! lol

Originally posted by @Christopher Lessing :

Thanks for your response, I am leaning heavily toward keeping it for cash flow for a few years.

For those of you that have done something like this, is there a way to rehab and add units without dramatically increasing the property taxes?

No permits is one way, but I don't recommend that.