To Flip or to BRRRR?

[Chris Rodriguez]

Hi friends. I am in the initial stages of finding my first investment property and I am kind of torn between flipping or BRRRRing. Listening to the podcast and reading the blogs, it seems that seasoned investors may end up doing some sort of combination of both. All things considered, I am leaning towards flips ONLY because it worries me to have to deal with tenant-related problems (late-or-no payments, the potential for evictions, and more importantly, destruction of property). I know it is up to me to make sure applicants/tenants have the "right" background and income to help curtail potential problems but it still makes me feel uneasy. What would you recommend?

[Bryce Kennebeck]

Typically when getting started, flipping is used to build capital, where as Brrrr is used to build a portfolio since your not selling the property. I personally don't care for the idea of flipping because now you take your profit with a big tax bill or you have to 1031 into a new deal in a short period of time. Whereas Brrrr allows you to cash-out-refi without getting taxed so you can do another but the best part is you still have the house that's cashflowing and an appreciating asset that you can consistently pull money out every so many years. Only reason I personally would flip it after the rehab is if the numbers make sense too or if it was causing to many problems. It really comes down to personal preference, but at the end of the day your taking a risk with RE either way so if you have the time and will power id say Brrrr, unless your hard-pressed for cash.