Rehab to SFH&Flip vs 3plex&Hold

[Travis Meservy]

Two weeks ago I closed on a distressed large SFH in a small town 1hr from me. My plan was to rehab and resell as a SFH. Now I've learned there is good potential for converting it to a triplex. It's a 2300sf two story on 0.3acre corner lot, with medical offices/retirement home across the street.

Should I rehab to SFH & sell or to a triplex & hold? It could cashflow ~$600/mo according to BP BRRR calculator. What factors should I evaluate to help me decide?

Property numbers: PP: $84k, Rehab(SFH): $120k, ARV(SFH): $300k; Rehab(Tri): $160k?, ARV(Tri): ?, Expected rents: $3×1000=$3k/mo.

[Alan F.]

Quote from @Travis Meservy:

My goal is to own assests and wait for inflation/ appreciation. I like the value-add possibility & using leverage in real estate (RE).

I don't plan to move or start a business soon, so RE is my main capital need. Unfortunately, I didn't own any RE during the post-Covid inflation. With my median+ W-2 and a family I don't accumulate cash quickly, so paper loss is not helpful. I'm interested in learning all aspects of RE, including self managing property, and maybe get into STR.

This being my first deal, I'm not confident in finding more flips, so I want to defer taxes to preserve my profits. 

All my goals point to Triplex&Hold, but there are few rent-cost & multi-fam ARV comps in the area, so it seems less predictable. Alternatively, sticking to the plan feels safe, and post-flip liquidity sounds nice.

 This is great value add, in a great area. I think you answered your own question. Plus you're going to learn alot moving forward, that alone is worth delaying the cash for your long term goals.