How do you decide which strategy makes the most for a deal?

Question

I've been thinking about how different investors underwrite the same property, and I'm curious how others approach this.

Let's say you find a property that looks interesting at first glance.

Depending on the numbers, it could potentially work as:

Flip

BRRRR

Long-term rental

Do you usually underwrite all three before deciding which strategy makes the most sense, or do you already have a preferred strategy and only analyze the deal through that lens?

I'm particularly interested in how people compare the risk-adjusted return, rather than just looking at the highest projected ROI.

For example, a flip might show a higher absolute profit, while a BRRRR could leave you with significantly less capital tied up and a rental could provide a different risk/return profile.

How do you guys actually make that decision today?

Excel?  BiggerPockets calculators? Or do you just know pretty quickly from experience?

I'm asking because I'm using a tool that I specifically designed around comparing multiple strategies on the same deal, and I'm trying to make sure the workflow actually matches how active investors think about deals and how the deal works for you for the best.

Alyssa Marquez · Answer

I agree with considering a number of different strategies when there is room for more than one avenue. Instead of just focusing on highest prospective ROI, you should be compare such items as: capital remaining in the deal; days to close; rehab exposure; financing fees and carrying costs; actual ongoing cash flow; what happens if the initial strategy doesn’t pan out? Plan B is also crucial in this process. A flip might look best on the screen, but when a B/RRR can also work out at conservative rates and utilize much less capital – the risk adjusted strategy might actually be the BRRR.

Saar Dau · Answer

That’s exactly the framework I’ve been thinking about.

I particularly like your point about using the same assumptions across strategies otherwise it’s very easy to end up comparing apples to oranges.

Out of curiosity, when you do this in your spreadsheet, do you have a dedicated model for comparing strategies side by side, or do you usually run each strategy separately and compare the results manually?

Divin Kanyama · Answer

@Saar Dau, I usually start with my preferred strategy, but I still run a quick comparison across the obvious alternatives before making a decision. A deal may look great as a flip but become less attractive once you factor in execution risk, market timing, capital needed, and tax impact. Likewise, a BRRRR or long-term rental may produce a lower headline return but offer better downside protection or lower capital left in the deal.

For me, the key is not just highest ROI — it’s risk-adjusted return. I’d compare:

• Total cash required
• Timeline to return capital
• Exit risk
• Renovation risk
• Financing risk
• Cash flow after stabilization
• Capital left in the deal
• Sensitivity to rent, ARV, rates, and holding costs

I typically use a spreadsheet because I want to see all three strategies side by side with the same assumptions. Experience helps you eliminate bad fits quickly, but I still like having a consistent framework so I’m not forcing a deal into the strategy I wanted before seeing the numbers.

The best workflow, in my opinion, is one that helps answer: “Which strategy gives the best return for the amount of risk and capital required?” Not just “Which one shows the biggest profit on paper?”

Denise Supplee · Answer

I don't think the highest projected return is always the best investment. I'd look at the amount of risk, time, and money involved with each strategy and what happens if things don't go as planned. These days I invest more passively, so I'm also looking closely at the people involved and how the investment will be managed. For me, it's about finding the right balance between return and risk.

Saar Dau · Answer

I agree. I think the highest projected return can actually be misleading if you don’t account for the capital, timeline and downside risk required to achieve it.

That’s actually one of the things I’m trying to understand better how investors weigh those factors when choosing between strategies.

Do you have a particular framework or metrics you use to compare risk vs return, or is it more experience based at this point?