Flipping vs buy and hold- First deal in the Chicago area

[Account Closed]

Hi, 

I was able to raise 50,000 private money from one of my friends. I'm debating if I should do my first flip or buy a 3-4 flat at 70-80 % discount  and refinance it after a year. 

I'm very new to real estate (less than 6 months) and haven't done any flips. I also don't have any 3-4 flats but if I would hire a property management company to do the work for me. 

What are your thoughts on buying and flipping a property with no real estate experience? Would you rather buy and hold or fix and flip a property? I've read plenty of opinions on BP's. I'd really want to know the worst case scenario under both circumstances as well as the pros and cons of flipping vs buy and hold.  

[William Baumann]

As this is your first flip, it sounds like your setting yourself up for possible failure as I am sure others will tell you.  With the limited funding you have your going to have to be very, very careful with the numbers.  I advise you to avoid using credit cards, you could however keep that option open as part of your contingency plan.

Have you talked to any hard money lenders so you know you can obtain the financing you will need?  What type of property are your targeting?  

Buy and hold could be an option depending on your hard money terms, you will most likely find that your property won't be able to cash-flow once you consider the high interest rate on hard money. You also need to think and plan out your exit strategy in the event you are unable to refinance.  Right now is a dangerous time IMO, to take a property with the intention on refi in 2 years as the fed has stated they are looking to raise interest rates.  Not saying it can't work, just something to think about in your planning.