Skip to content
×
Pro Members Get
Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
ANNUAL Save 54%
$32.50 /mo
$390 billed annualy
MONTHLY
$69 /mo
billed monthly
7 day free trial. Cancel anytime
×
Take Your Forum Experience
to the Next Level
Create a free account and join over 3 million investors sharing
their journeys and helping each other succeed.
Use your real name
By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.
Already a member?  Login here
Investor Mindset
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated over 3 years ago on . Most recent reply

User Stats

28
Posts
12
Votes
Adrian Rae
  • Rental Property Investor
  • San Diego, CA
12
Votes |
28
Posts

My partner would rather pay top $$ for a flip than buy a fixer

Adrian Rae
  • Rental Property Investor
  • San Diego, CA
Posted

His POV is that he’d rather have the cost of all the improvements built into the monthly mortgage payments than spend the time and credit card/debt to complete improvements on a fixer.

We focus on STRs but ensure the LTR rate out cover the mortgage (I double check expenses). So far we flipped a condo in Scottsdale and took out an interest free cc to pay for the contractor and furnishings. We still have the cc debt to finish paying off but the property has already appreciated 60K in 5 months. He’s not interested in long term appreciation, he wants cash flow so he can pay off the mortgage in 10 years or so. He’s rather not lose time and add debt making improvements on our own - he’s willing to pay for the work to be done, even if 10k’s of the purchase price and pure profit for the seller.

Is this a short sighted approach to developing a REI portfolio? Personally, I'm trying to make the case that the 30k we spend on our own flip can actually provide 2x as much value IF we were to sell it - but we aren't selling anytime soon so he doesn't see the value in that.

We're new, with only 2 STRs currently but looking to scale so we can quit our jobs and just focus on REI.

Can anyone else justify paying top dollar for turn key properties when just starting out as REIs? (we put 5 or 10% down)

Thank you!!

Most Popular Reply

User Stats

3,526
Posts
3,041
Votes
Joe S.
#4 Real Estate Horror Stories Contributor
  • Investor
  • San Antonio
3,041
Votes |
3,526
Posts
Joe S.
#4 Real Estate Horror Stories Contributor
  • Investor
  • San Antonio
Replied
Originally posted by @Adrian Rae:

His POV is that he’d rather have the cost of all the improvements built into the monthly mortgage payments than spend the time and credit card/debt to complete improvements on a fixer.

We focus on STRs but ensure the LTR rate out cover the mortgage (I double check expenses). So far we flipped a condo in Scottsdale and took out an interest free cc to pay for the contractor and furnishings. We still have the cc debt to finish paying off but the property has already appreciated 60K in 5 months. He’s not interested in long term appreciation, he wants cash flow so he can pay off the mortgage in 10 years or so. He’s rather not lose time and add debt making improvements on our own - he’s willing to pay for the work to be done, even if 10k’s of the purchase price and pure profit for the seller.

Is this a short sighted approach to developing a REI portfolio? Personally, I'm trying to make the case that the 30k we spend on our own flip can actually provide 2x as much value IF we were to sell it - but we aren't selling anytime soon so he doesn't see the value in that.

We're new, with only 2 STRs currently but looking to scale so we can quit our jobs and just focus on REI.

Can anyone else justify paying top dollar for turn key properties when just starting out as REIs? (we put 5 or 10% down)

Thank you!!

 I had a very hard time following your train of thought and the story. One minute you’re saying you’re flipping properties and the next minute you’re saying short term rentals…which would be something you’re holding of course. Look there’s a big difference between flipping stuff and holding stuff and your inner changing so much it’s hard to give you clear advice. I’m assuming you want clear advice so I’m pointing this out to you.

  • Joe S.
  • Loading replies...