Rehab to SFH&Flip vs 3plex&Hold
Member since 2023 · 2 posts · 0 votes
Two weeks ago I closed on a distressed large SFH in a small town 1hr from me. My plan was to rehab and resell as a SFH. Now I've learned there is good potential for converting it to a triplex. It's a 2300sf two story on 0.3acre corner lot, with medical offices/retirement home across the street.
Should I rehab to SFH & sell or to a triplex & hold? It could cashflow ~$600/mo according to BP BRRR calculator. What factors should I evaluate to help me decide?
Property numbers: PP: $84k, Rehab(SFH): $120k, ARV(SFH): $300k; Rehab(Tri): $160k?, ARV(Tri): ?, Expected rents: $3×1000=$3k/mo.
My goal is to own assests and wait for inflation/ appreciation. I like the value-add possibility & using leverage in real estate (RE).
I don't plan to move or start a business soon, so RE is my main capital need. Unfortunately, I didn't own any RE during the post-Covid inflation. With my median+ W-2 and a family I don't accumulate cash quickly, so paper loss is not helpful. I'm interested in learning all aspects of RE, including self managing property, and maybe get into STR.
This being my first deal, I'm not confident in finding more flips, so I want to defer taxes to preserve my profits.
All my goals point to Triplex&Hold, but there are few rent-cost & multi-fam ARV comps in the area, so it seems less predictable. Alternatively, sticking to the plan feels safe, and post-flip liquidity sounds nice.
This is great value add, in a great area. I think you answered your own question. Plus you're going to learn alot moving forward, that alone is worth delaying the cash for your long term goals.
Two weeks ago I closed on a distressed large SFH in a small town 1hr from me. My plan was to rehab and resell as a SFH. Now I've learned there is good potential for converting it to a triplex. It's a 2300sf two story on 0.3acre corner lot, with medical offices/retirement home across the street.
Should I rehab to SFH & sell or to a triplex & hold? It could cashflow ~$600/mo according to BP BRRR calculator. What factors should I evaluate to help me decide?
Property numbers: PP: $84k, Rehab(SFH): $120k, ARV(SFH): $300k; Rehab(Tri): $160k?, ARV(Tri): ?, Expected rents: $3×1000=$3k/mo.
IMO its about your goals and situation, those are pretty good numbers either way. You'll pay cap gains on the flip, holding and management on rental. I'm thinking Boise are will appreciate too.
My goal is to own assests and wait for inflation/ appreciation. I like the value-add possibility & using leverage in real estate (RE).
I don't plan to move or start a business soon, so RE is my main capital need. Unfortunately, I didn't own any RE during the post-Covid inflation. With my median+ W-2 and a family I don't accumulate cash quickly, so paper loss is not helpful. I'm interested in learning all aspects of RE, including self managing property, and maybe get into STR.
This being my first deal, I'm not confident in finding more flips, so I want to defer taxes to preserve my profits.
All my goals point to Triplex&Hold, but there are few rent-cost & multi-fam ARV comps in the area, so it seems less predictable. Alternatively, sticking to the plan feels safe, and post-flip liquidity sounds nice.
My goal is to own assests and wait for inflation/ appreciation. I like the value-add possibility & using leverage in real estate (RE).
I don't plan to move or start a business soon, so RE is my main capital need. Unfortunately, I didn't own any RE during the post-Covid inflation. With my median+ W-2 and a family I don't accumulate cash quickly, so paper loss is not helpful. I'm interested in learning all aspects of RE, including self managing property, and maybe get into STR.
This being my first deal, I'm not confident in finding more flips, so I want to defer taxes to preserve my profits.
All my goals point to Triplex&Hold, but there are few rent-cost & multi-fam ARV comps in the area, so it seems less predictable. Alternatively, sticking to the plan feels safe, and post-flip liquidity sounds nice.
This is great value add, in a great area. I think you answered your own question. Plus you're going to learn alot moving forward, that alone is worth delaying the cash for your long term goals.
Travis,
Congratulations on your investment. If you have a need for the cash now then you could flip it to pay the expense. For example, if you are in need of a new vehicle than flip it and pay cash for your new vehicle. You could also flip it if you have other debt like credit cards and such that you could pay down or pay off. If you are looking to create additional cash flow to supplement your W2 income then rent the property.
Do some research on what places are renting for in that market to determine expected rental income. Ensure you account for all expenses to include vacancy rate, repairs, utilities, and property management. Managing it yourself is a way to learn the business, but with the property being an hour away you would have to determine if you have the time given your other responsibilities. Good luck.