Having Trouble Picking Strategy

[Tom Scott]

Hello all,

My first mail campaign began this weekend so hopefully the phone will start ringing shortly. My long term goal is buy and hold rental properties, mostly SFR, but I have managed to convince myself I need more cash to buy a rental property and therefore I am going to start out with fix and flips to build up my cash reserves before committing to a long term buy and hold. I want to repeat this process over and over for as long as I see fit. The problem is, the more I ponder this strategy, the more I realize that if I find a good deal for fix and flip, that deal would also probably make a excellent deal for a rehab and rent. Gainesville is a college town and the rental market seems to be doing quite well and should continue to do so for a long time.

So the question is, am I stupid to cash out on a fix and flip when I could probably turn it into a cash flowing rental instead? If I "buy like a wholesaler", my deals should have tons of room for cash flow even with bank financing. I'm interested to hear the groups responses. Just for the record, I can handle property management, but I am thinking I would rather buy low enough to afford to pay for it with my cash flow. I would rather buy more houses than spend my time fixing stuff.

Tom

[Robert Leonard]

@Tom Scott I think you nailed it with your thought of "if I can buy like a wholesaler and fix it like I was going to flip it, why not hold on to it?"  That's my thinking exactly.  The flip is my "plan B" on all of my deals.

I'll send you a colleague request and we can talk more details, but I think you are right on the money with your thinking.

The SD-IRA strategy works if you have a significant amount of money built up in a former employers 401k or IRA that you've funded on your own. Otherwise you can only start building up in an IRA on your own until you have enough to start investing with. There's a lot to know to set it up and then use it properly. I use it personally, but the stars lined up just right (not part of any ingenious plan) and I had a former employer's IRA and Roth IRA savings that were positioned perfectly for this purpose.