Better to filp or rent out in current market?

Question

Hello there!

Given that it's super difficult to find flip properties in Arizona I'm wondering what I should do with a property I'm about to purchase. Seems like "wholesalers" around here are more like "retailers." The place I have found Is in a good neighborhood in Tempe. Would pick it up for $190 and the comps are in the $230-$240 range. It will need $20-25k to rehab. Other rentals in the neighborhood are in the $1600/month range.

Given the odds for finding more properties is fairly slim, possible but slim, would it make more sense to hang on to it and rent it out than to flip it?

I'd love to hear your thoughts. Thank you!

Lee S. · Answer

This doesn't look like a deal either way, I would pass.

Mason Aitken · Answer

This is all great info! Keep it coming.

Stone Jin · Answer

Depends on your strategy and what phase you are in.  The pricing doesn't make it a BRRR candidate.  If you just want to park money, likely the house will be worth more next year than it does this year.  If you want to make money then this flip is really slim, with holding costs and closing costs, you might break even at the end of the day.  Seems like a lot of hassle to try to make 10K on a flip.  You should also check your rent numbers,  I'm not sure a 220K house would rent for 1600.  We have houses worth more than that rent for less in Chandler.

Mason Aitken · Answer

I offered $180 but they won't go any lower than $185. Looks like I have much to learn from you guys!

Patrick McCandless · Answer

Yeah I'll echo what the rest have said. Those numbers are found on a daily basis no problem. When you say "I would pick it up for $190k..." what are you going by? Is that just the asking price? What's preventing you from making an offer for $170k?

Mason Aitken · Answer

Thank you guys for the feedback!

Garrick Oconnell · Answer

I would say your numbers are off on the rehab closer to 30+, and the rental income seems very high.

Not sure who you are working with to buy that house but try to get it for 160-170 tops to compensate for the work to be done. Otherwise its not a deal.

Adam Dahlberg · Answer

@Mason Aitken -  no problem.. my contact info is in my signature. Give me a shout anytime! :-)

Mason Aitken · Answer

@Adam Dahlberg I would love to chat with you about purchasing in Tempe and other areas. That price range sounds perfect. Are you going to the meetup this week week?

Adam Dahlberg · Answer

@Mason Aitken we are getting good deals all the time in the East Valley ... but it really comes down to who can act quick. If it's a real deal it is rare it lasts more then a few hours. But let me know what you are looking for and I can call you first

As for tempe .... what neighborhood? A 190 in tempe is probably a pre 1970 house and has all the things an inspector likes to call out. I have never rehabbed a tempe house under 28-30k minimum, even for rentals.  Now, if you have the cash out can take a 200k tempe house to a 375-399k pretty easy as long as it conforms to the area or by campus. But those are always a 60k+ rehab with added sqft.  Give me a call or text and we can chat. Thx

Better to filp or rent out in current market?

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