EXPERIENCED Buy/Hold - Would you KEEP or FLIP this deal?

[Chris Wolfe]

Hey BP Team!

Looking to get some weigh in from some experienced buy and hold investors on this....

To give some context - I flip/build homes and keep as many as I can, mostly higher quality homes in good areas.  I've currently got a portfolio of 45 properties in Austin TXD  I'm tapering off of buying rentals only because I need to preserve money and because I want to build more liquidity in general rather than just equity.  

I have these 2 deals and am just wondering your take and what you would do...

Deal #1 - Tampa FL Duplex (3/1 house with an attached 1/1 apartment) - Purchase price plus minor rehab/loan fees/temp financing fees (interior paint of 3/1, changing some light fixtures, some minor cleanup) I will be all in at $125k. Value is $180-190k. Gross rents are $1,700/mo. If I do a 30 year loan at the $125k my PITI is right around $1,050 so it will cash flow $650/mo. This would be with no money down, but my reservation is its not in a great area. THe place is well done, newer cabinets, tile floors, block construction, dual pane windows, etc. But still when you consider cap x, the occasional eviction, etc the $650/mo cash flow can get wiped out quickly. Would you keep this deal because of its cash flow with no money into it? Or turn it and make a quick 60k+.

Deal #2 - Tampa FL 2/1 800 feet.  Purchase $100k, rehab for rent ready is $40k.  Value is $200k.  Same situation, would cash flow about $250/mo with no money into the deal.

My only fear is I dont want to load up on C class property rentals because of all the drama that comes with it, and lower levels of appreciation and ongoing maintaince, but at the same time it seems foolish to walk away from cash flowing rentals with no money into them.  Thoughts??

-CW

[Joe Villeneuve]

What does "45 properties" mean? REI isn't about collecting properties...it's about collecting $$$$,....cash. With that in mind, 45 properties could equal the same PV, equity and cash flow as someone else with only 5 properties.

I'm not a big fan of Class C...even with big CF, for the same reasons you mentioned.  I only hold any property for no more than 5 years anyway, with the idea that the equity has at least doubled, and I can turn it back into a 5 times value.  Understand that the value of your equity is directly related to the PV.  THis means as your equity increases due to appreciation, your equity value decreases.  Selling the property gets it back to where it should be.

There is nothing bad about walking away from a deal.  Sometimes the best deals you make, are the ones you don't, and I can guarantee you this, when you start rationalizing, or getting emotionally tied to a property, you're heading downhill from that point forward.

Not enough info ($$$$$ numbers) to really even understand the true/complete picture here.