Flipping VS. BRRR???!!!

[Account Closed]

Hello All,

I wasted a portion of my day looking back on past deals and spread sheets instead of finding my next project...Long gone are the days of buying a POS like this for $46,000! (In my market at least.)

Seeing the current estimated values on some of these flips has been a gut punch. The home below: Bought 46k had 90k in repairs - Sold at 240k - Current Est Value is $350,000!!!

I have to admit, this is making me reconsider my fix and flip strategy. If I RRR'ed the smallest 3 of my flips over the past decade I'd have $675,000 in equity before even counting the rental income.

Looking back I had the mentality that I have to sell them to free up cash and keep moving but clearly I dropped the ball over the past 10 years.

Never should have sold the smaller deals, never should have watched the Big Short movie.

Are other flippers looking back at deals and coming to a similar conclusion?

[Evan Polaski]

@Account Closed, when you sold the property, and netted about $80k after tax, did you reinvest that or spend it?

I absolutely HATE the "flipping builds income, rentals build wealth" statement.  It is simply wrong on so many fronts.  It implies you only do one flip, then stop investing. But let's look at 3 flips, assuming you made about $80k each, 10 year ago.  You made $240k.  If they were rentals, you would have made what, $20k net, in that year, so let's work with the $220k you had left.

Let's assume each flip you profit about 20%, you do 3 per year, one at a time, 4 months each.  So you are annually generating 60% returns.

Yr 1: $220k
yr 2: $352k
yr 3: $563k...

Yr 10: $15mm.  If you consider this "income" versus your $675k in equity from the same houses, you should have your head checked.

Wealth is built through TRAJECTORY of capital. And rentals, even in good appreciation times, can't hold a candle to the trajectory of successful flips, IF you are redeploying the capital into another flip to keep it growing, and not spending it.