BRRRR Vs Flip When And Why!!

[Steven Garza]

Hello BP community,

I am currently about half way through my 1st Flip or what I thought i was going to flip. How can I determine lets say if i wanted to rent out this property using the BRRRR method rather than just flipping it? Its a condo in Scottsdale AZ. Any and all help is appreciated.

Thank you.

[Ty Coutts]

Hey Steven,

You must consider a number of variables before making a decision. First, look at comparable rental properties on websites like Rentometer or Zillow to get a sense of the average rent you can charge. This will help you research the Scottsdale rental market. Next, figure out how much the entire rehab will cost and contrast it with the possible rental income. Make sure the renovation significantly increases value in order to support a higher rent. Subtract all costs (mortgage, property taxes, insurance, maintenance, property management fees, and HOA fees) from rental income to determine the estimated monthly cash flow. It takes positive cash flow to make a BRRRR investment profitable. Examine the post-rehab value (ARV) of the property to determine whether you can refinance and extract most or all of your original investment. Speak with lenders to learn about the conditions and criteria of refinancing. Examine the terms of financing. for keeping a rental property as opposed to selling, and take long-term investing objectives into account. For information about Scottsdale rental properties, check the HOA and municipal laws. Finally, in the event that the rental market underperforms, have a clear exit strategy in place, such as selling the property.

Hope this helps! Please feel free to reach out to me directly if you have any other questions or if you just want to discuss. 

P.S. I am a loan officer if you need assistance with any of the financing things I mentioned above!