Brrrr or flip?

Question

Hey y’all! I’ve completed a couple of successful flips, but I’m still getting familiar with the BRRRR strategy. I currently have a property under contract at $160,000, with little to no rehab needed. It should rent for $1,600–$1,700, and the ARV is around $230,000. I could net a solid return by wholetailing/flipping, but I’m curious — would these numbers make sense for a BRRRR given that my PITI would be roughly $1,600?

Elealeh Fulmaran · Answer

Quick scan: Purchase 160k, ARV ~230k, rent 1,600–1,700, PITI ~1,600. As a BRRRR, that’s breakeven to thin cash flow after vacancy/maintenance, and a refi at typical LTV likely leaves some cash in. If your goal is cash flow now, wholetail/flip and redeploy into a cleaner 1%+ rent-to-price deal. If your goal is stacking doors, you could hold as a near-breakeven with solid equity, but only if you’re comfortable leaving money in and banking on stable rents. Next step: decide flip vs hold by running a DSCR-style calc with 5–10% expense reserves; if it’s ≤ zero, take the flip profit and hunt a stronger BRRRR.

Ashish Acharya · Answer

@Leelynd Jackson,

Congrats on those successful flips, that’s definitely no small job, and these numbers look pretty solid at first glance!

From a tax perspective, both options can work, but they’re taxed very differently. If you flip or wholetail, your profit is taxed as ordinary income, so you’ll pay higher rates and possibly self-employment tax.

If you hold and rent, you’ll get depreciation, interest, and expense deductions that can offset rental income and lower your overall tax bill. The key is that your cash flow should stay positive after the refinance. If your PITI is $1,600 and rent is $1,700, it’s tight but workable if you plan to hold long term and benefit from appreciation and tax savings. Like Michael said above, sometimes it's a boring plan, but it works if you strategize and can leave some room for growth.

If short-term cash is your priority, flip it. If long-term wealth and tax efficiency matter more, BRRRR could be smarter.

Good luck running the numbers! Happy to connect.

Henry Lazerow · Answer

That deal sounds best to flip. Brrr worked better when rates were way lower.

Dan H. · Answer

I do not know how others do underwriting, but my underwriting includes sustained PITI, maintenance/cap ex, vacancy, PM , bookkeeping/tax person, asset protection, and miscellaneous.   My cap ex has been calculated by replacement costs versus expected life expectancy of all property components.

I allocate pm even if self managing because my time is very valuable and I deserve to be well compensated.

Using my underwriting, this property is very large cash flow negative.  It is not near breaking even and I challenge anyone to show me any realistic underwriting that depicts otherwise.

Assume retail is $230k with purchase at $160k, the faster you can sell the higher your profit.  Note there will be closing costs upon purchase, the holding costs, and the selling costs.  The one cost you can significantly affect is the holding costs.

good luck

Caleb Brown · Answer

As others said cashflow will be zero or negative. If you like the area and it's a long term play it can be feasible. I would encourage to have reserves if you keep the property floating along. I do think flipping would make sense especially since you are getting the ball rolling. Find something that would cashflow a little more to help.

Michael Hernandez · Answer

Those numbers could work either way, but it depends on your long-term goal. If you want quick profit and more cash for your next deal, flipping or wholetailing might make sense. But if your goal is to build steady income and equity, holding it as a BRRRR could be smarter.

With rent around $1,600 and PITI roughly the same, you would likely break even on cash flow at first, but you’d gain from appreciation, loan paydown, and tax benefits over time. It may not be exciting right away, but if you plan to hold it for a few years, that equity growth could easily beat a short flip profit. The key is to run the refi numbers and make sure the cash-out gives you enough room to move on to your next deal without being too tight on monthly expenses.

Erik Estrada · Answer

This would depend on your strategy.

If your goal is to get into larger, more expensive properties, it may make more sense to flip and put the money to work on another flip or more profitable rental.

Ricardo R. · Answer

Hey Leelynd — nice work lining up another solid deal. Those are good problems to have.

If your PITI is roughly $1,600 and rent is in the $1,600–$1,700 range, it’s basically break-even on cash flow, which isn’t bad if you’re using BRRRR as a long-term equity and appreciation play — but it’s not a great hold if you’re looking for immediate income. You’d be banking more on loan paydown and value growth than on monthly profit.

Here’s how I’d look at it:

• If you flip: You lock in that equity spread ($230K ARV – $160K purchase = ~$70K), minus costs and taxes, but you get your money back quick and move on.
• If you BRRRR: You’d probably refinance out most of your capital, end up with minimal cash flow, and take on landlord risk — but you’d still own an appreciating asset.

If you flip: You lock in that equity spread ($230K ARV – $160K purchase = ~$70K), minus costs and taxes, but you get your money back quick and move on.

If you BRRRR: You’d probably refinance out most of your capital, end up with minimal cash flow, and take on landlord risk — but you’d still own an appreciating asset.

For BRRRR to really make sense, I like to see at least $300–$400/month net after all expenses — or a strong reason to hold long-term (like location upside, rezoning potential, or tax benefits).

Given your experience flipping, this one feels a little tight for a BRRRR unless you’re trying to build a rental portfolio right now. Otherwise, it’s a clean wholetail or flip candidate that keeps your velocity of money high. Leelynd, I really hope this helps you a bit gives you another outlook, I sent you a DM on BP... it's one of the reasons I do this, I hope you can assist. Thank you in advance.

Brrrr or flip?

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