BRRRR as a flipping strategy?

[Naomi Bjerk]

BRRRR is often used as a rental income building strategy… I'm wondering, why couldn't another R be added to adapt it for flipping?

Buy, Rehab, Rent, Refinance, Re-Sell, and Repeat

The idea being: you buy the property and fix it up, then rent it out to cover holding costs, re-finance to a conventional loan (if you used hard money etc. for the original loan), then resell the property after the year lease is up. That way, you get the tax preferential treatment of long term capital gains and still get to build up capital while you flip.

Any thoughts on this? Potential downfalls? If you live in an area that is good for flipping, but not so great for long-term rentals (aka Illinois with some of the highest real estate tax rates in the country), I could see this as a way to keep flipping but avoid the steep tax rates that come with the straight flip.

[Greg Dickerson]

@Naomi Bjerk yes this is an especially good strategy for vacation rentals, turn key rentals, Air BnB and commercial property.