Flipping vs. BRRR

[Landon Dolezal]

So I've been interested in doing some flips in my area. (Been doing some "driving for dollars") but as I've been listening to the podcasts I just wondered why would someone flip when they can keep and refi later on and still get their cash back. Am I missing some finer points here? I appreciate all the feedback. :)

[Michael Boyer]

Hi Landon, some of the threads on buy and hold versus flip have been talking about this... and you can look at a range of factors, everything from numbers to personal preference and playing to your strengths.. I buy and hold, but the allure of the flip, like a siren call, does come now and gain when I see an ideal property or an episode of some HGTV flip show... 

Some strong flip type people in my area are better with construction and just not interested in the day to day working with tenants and get rich slow approach.They are more sheetrock than spreadsheet types, get in, get out, get paid... 

They are just different strategies that play to different skill sets... just a fun story example, about every contractor I know asks me "how do you deal with tenants" (which I think is fairly straight forward and can even be fun and rewarding) and I ask them "how the heck did you just renovate everything on that house in a few months" (which they think is straightforward and fun)...We each think the others' job is the tough one.. So they flip some houses.. I hold them.. Not sure why but some people have an almost irrational fear of tenants (perhaps from past experience, etc).. But I see more people doing both and even melding the strategies.... Good question to ponder and I think I see which way you are leaning..

[Joe Bertolino]

What is the highest and best use of the property? For my area, it makes more sense to flip single family homes and redirect the profits into multi units (2/3/4) to BRRR. I can find single family deals that rent in 1%+ range that would cash flow but it would give me little satisfaction. I would prefer to see a homeowner in there and the profits funding larger properties designed for renters. My main goal is to have a few large apartment complexes with a PM handling everything.

[Landon Dolezal]

Thank you both, I realized I didn't ask my question right and what I meant to get at is: I want to be a buy and hold investor but would there be any reason for me to flip instead of rent out? I think @Joe Bertolino might have answered it. Highest and best use. I just know there's a couple of very distressed houses in my area and I didn't know if I should go about flipping them or buy and hold. Thank you both so much for the feedback, very helpful :)

[Ryland Taniguchi]

Originally posted by @Landon Dolezal:

So I've been interested in doing some flips in my area. (Been doing some "driving for dollars") but as I've been listening to the podcasts I just wondered why would someone flip when they can keep and refi later on and still get their cash back. Am I missing some finer points here? I appreciate all the feedback. :)

Depends on the area. Personally, I prefer BRRRR over flipping. But here is the problem. We BRRRR in Tacoma and Lakewood because those are the only areas where you can consistently BRRRR locally. But those are rough areas. Had a break in this week on one our subcontractors in the house in Tacoma. Fortunately, she had a gun. There is a reason we have alarm systems on every Tacoma BRRRR rental.

In other words, BRRRR sounds great but show me some local investors doing it consistently here in Seattle. The only areas with 1%+ rule are pretty rough areas (of course with exceptions as every once a year you find a diamond in the rough in Kirkland). We are probably doing more BRRRR than anyone I have met yet (about 60 a year in seattle).

Most areas locally don't come close to a 1% rule rental. For example, Ballard and Queen Anne is flips or LR2 development all day long. 

I still like flips that could also be BRRRR because if 2008 happens again (and it will) I could always rent our flips and be happy with that outcome.

[Jay Rogers]

Flipping houses is a very good option if the house is in a good area.

So if you are finding property in a good area which is having high budget buyers then you should flip the home.

Elsewhere in the other area you can apply the renting scheme.