Flip or rent? New purchase-take profit or rent long term?
Just purchased a property under market value. Option 1 is to flip immediately not touching the property and make $15-18k profit after all done. Would pay short term capital gains so more like $10-$12K profit. Option 2 is to sink $5,000 into property in rehab over the next 3 months when I'm not doing my W2 job and rent it out. Preliminary rent numbers after rehab showing about a 11% cash on cash return after year 1. Purchase price $88,000 I have offers for $110,000 now.
#2 General Landlording & Rental Properties Contributor
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#2 General Landlording & Rental Properties Contributor
What do you want to do? and what is the actual cash flow (not a percentage)? If you do rent it, plan on holding it for more than 1 year. If you sold it, what would you do with the cash and would you net a larger return? A $15-18K profit for a house around $100K is pretty good.
Quote from @Theresa Harris:
What do you want to do? and what is the actual cash flow (not a percentage)? If you do rent it, plan on holding it for more than 1 year. If you sold it, what would you do with the cash and would you net a larger return? A $15-18K profit for a house around $100K is pretty good.
Cash flow would be $4,000. I did finance with 25% down and would have another $5000 in rehab. If I sold I would put that towards other debt or try to find another deal out there to buy and rent.
#2 General Landlording & Rental Properties Contributor
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#2 General Landlording & Rental Properties Contributor
Quote from @Cody W.:
Quote from @Theresa Harris:
What do you want to do? and what is the actual cash flow (not a percentage)? If you do rent it, plan on holding it for more than 1 year. If you sold it, what would you do with the cash and would you net a larger return? A $15-18K profit for a house around $100K is pretty good.
Cash flow would be $4,000. I did finance with 25% down and would have another $5000 in rehab. If I sold I would put that towards other debt or try to find another deal out there to buy and rent.
If you'd cash flow $4K per year(?), and plan on buying another rental, I'd keep the one you have. The value of the house has increases and if you rent it for 4-5 years you will make back what you'd get now (after taxes) and still have that equity in the home.
For long term buy and hold, you can definitely find better than 11% COC in the Quad Cities - I would target 20%+ (and more than $4k/yr per door depending if you self manage or not). Feel free to DM me with any questions
I would aim for higher rent for a greater return. I think holding it as a long-term property would be your best bet considering monthly income and appreciation.