Flipping vs. Fix-to-Rent

[Brian Qian]

Hi BP Team,

I've been debating whether it makes sense to find more 'fix-to-rent' type of deals rather than buying an outright 'fix-to-sell' or an outright 'turnkey rental' in the SFH space. Has anyone explored or preferred this route? Any tradeoffs that should be considered?

Some thoughts:

- attracting better tenants through more attractive housing

- longer-term, sticky tenants because of SFH (multi-family is much more challenging)

- tax benefits from those with a W2

- easier to manage slightly smaller projects without a sell horizon

[Jonathan Greene]

You have to have a plan going in based on the area metrics. If the ARV is too low right now, it's a BRRRR. If the ARV is high, flipping makes sense. But you also have to have a backup plan - can you rent it if your flip doesn't sell? Can you Airbnb? If you know your numbers, you should know what your target is, but sometimes you are working on a rental idea and then a high sale closes in your area and you sell. You also have to know because the reno you do for a rental is not going to be the same you do for a flip in terms of the materials and finishes.