Fix and hold vs fix and flip

[Josh Norris]

I am getting ready to close on a property I put under contract about a month ago, the owner was very accommodating in letting me do my due diligence based on the condition of the house. I have so e questions about what my end game should be on this deal. I have I under contract for 88k, I am paying closing on a cash deal, ARV is 220k on the low end. The home is a complete redo with a leaky roof, slight hoarder house, unoccupied for the last 2 years, asphalt siding, new electrical......., you get it. I would like to hear people thought on fix and flip it or fix and hold? This will determine my costs and what I put into it. Rent would be around 16-1600/month.

Also as a side not can I paint asphalt siding and do they still even sell the stuff?

Thanks a ton,

Josh

[Michael Seeker]

Not only should you see if the property makes sense as a buy-and-hold from a raw numbers perspective, but also from a comparative perspective.

Just about any property will cashflow if you have enough equity into it, so just saying that it will cashflow if you've built in about 80K in equity doesn't mean it's a good rental candidate. If you're looking at making 80K on the deal, what alternative buy-and-hold properties could you purchase in a similar area? If you are leveraging, you'd be able to buy about $320K worth of multifamily property or $400K worth of single family property with that $80K as down payment. I can almost guarantee either would gross more than $1600/month. So the numbers make sense, but if your goal is to own long term holds, you're better off flipping the property and putting your profits into another rental property in the area.