Fix and flip or house hack for newbie???

Question

Hey everyone! So I am a total newbie to real estate investing (minus listening to hours of podcasts and reading books). I am going to be moving back to ND this summer for graduate school and I have a couple options I am currently looking at.

1) do my very first fix and flip and attempt to make about $30,000-40,000 on a deal I am looking at, bank it, and move on to the next one. (would be living in an apartment while in school and doing flips)

2) invest in a duplex (listed at $268,000, would try to acquire for around $250,000) that currently has one side rented and one side vacant (I would take out an owner-occupied loan and live in the vacant side for at least 2 years while in school). The duplex I believe would cost me around $1,400 a month and the one side is currently rented at $1,100 a month. It is a pretty nice building, very livable. Does not NEED renovations, but I could do some cosmetic rehab slowly myself over the 2 years of living there to increase the value and when I move out, rent that unit as well. I believe the unit I'd be living in would rent for around $1,000-$1,200 (after some slight updating). So total I could be bringing in about $2,300 or so on this duplex, paying $1400 in mortgage. After all expenses and using the rental calculator, I believe my cash flow would be just shy of $400 a month AFTER moving out and having both sides rented. This option would be appealing to buy and hold, also having most of my mortgage paid for while in grad school and MAYBE being able to do a flip within the next 6-12 months after getting settled into the duplex.

I feel like if I go for the flip now, which DOES seem like a good deal, I would be missing the opportunity for this duplex. What are your thoughts and has anyone been able to house hack AND do flips at the same time? (I'm sure it is possible, but for a brand new investor it seems like a lot). I just have high goals and am tired of waiting! Any advice, brainstorming, thoughts are all welcomed- please remember I am newer and here to learn. Thanks guys!

Twana Rasoul · Answer

@Leslie Crosten house hack a property that needs work and fix it up and add value, maybe you can kill 2 birds with one stone.

Best of luck!

Daniel A. · Answer

It seems like you find yourself in a common situation. Fix or Flip? While you could read books upon books on the topic, really, it boils down to what works for you. Yes, you could consider whether the property values in that area have historically risen or if they've remained static. That could help in your decision. If they've steadily risen, then holding onto the property for a somewhat long term could be in your best interest, even if the month-to-month net isn't exciting. And yes, you could try and flip it and make some profit.

As I am sure you know, when you flip a property, things go wrong. Plain and simple. Especially as a newbie, I myself have made countless errors, some of which being costly. But the thing about it, I don't get frustrated when I make an error. I don't stress when I have to cut a hole in the wall because I dropped a coax cable to the wrong spot. I don't get mad when I spend two hundred dollars on the wrong sized duct work. (For one, I enjoy working on my properties, and two, I don't get mad in general), but if anything, and this is how I mentally handle the financial blow, I consider the cost an educational expense. By this point I'm practically a licensed electrician, a master plumber, and a kick ass A/C guy (who only knows how crawl around in a 90 degree attic to replace R6 flex duct with the new fancy R8 that the inspectors say I need). While I've fudged up enough, I've learned even more.

Ask yourself what you want, long-term. If you don't know, then that's okay. Sometimes indecision guides you to try new things. And don't think of choosing one option over the other as missing out. The only way you'll miss out is if you don't do any of them.

Fix and flip or house hack for newbie???

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