Every rental is a flip. Hard to turn down the proven cash

[Dave Molesky]

Hello all,

My name is Dave Molesky.

I've been a member on here for a few years, but I don't think I have ever made a post. I love BP and have learned and applied several good pieces of information from this site. I listen to the podcast every week. It definitely keeps me motivated and helps me improve.

I'm a Software Engineer, but I have been flipping homes on the side for about 4 years. Its been going really good and my business is growing every year. I really want to start buying rental properties but the problem I am having is every deal that I run across that would be a good rental is also a good flip. I'm very confident in flipping in my market so its hard to turn down that quick guaranteed money that I know i can make from flipping the property. 

Things are going so good why would I change what I am doing? I can just keep doing more volume. Has anyone ran into this or have any advice? 

The only other thing I can think of is trying to start with larger multifamily for buy and holds.

Thanks,

Dave

[Natalie Kolodij]

HI @Dave Molesky 

I think you should look into the BRRR strategy! If that rental would work as a flip, it will work for BRRR.

With the BRRR you're basically flipping the house...but they keeping it and doing a re-fi to pull that money back out. You can then use that money in your next project/to buy a rental, ect.

Here's the huge benefit to passive income from rentals- It's not subject to self employment tax like your flip income is. 

Additionally, if down the road you transition into full time real estate professional you'll be able to general rental losses against ordinary income. 

This means that potentially, with the right portfolio of rentals, you can make $200k a year flipping a few houses and not pay any tax on it if your rentals are generating enough on-paper losses.