To rent or to flip is the question

[Ed Perez]

Hello, I'm just torn between rehabbing and flipping a property I own free and clear or just rent out the property after rehab. I know in this business it's just a numbers game and it just up to you when you want to get paid. Do you want to get paid now and look for the next deal or just recoup the overall $$$ invested over a period time? Should I opt for rent, the monthly gross rent is approx $4150 (or 49,800, cap rate of 5.5% only). My net yearly income from the rent would be $30,670. Should I opt to flip the property, however, I can potentially make $102k (net). This property is located in an affluent community and is in a good school district, and that's the reason why the cap rate is on a low side. 

What other things should I be considering to make a smarter decision? Making a little over 30k a year on a single property I think is a good passive income (less the headeache). To break even, it will take 20 yrs to recoup my investment. Making 102k on a rehab is also nice but, once I sold the property, I'm unemployed once again. I will be searching for another good deal out there.

Most of my properties are giving me between 15 to 22% cap rate (5k yearly income on each). This is the first time I'm torn between the two investment scenarios. 

So, please let me know your thoughts are. Thanks in advance.

Ed

[Troy Zimmerman]

Seems like a fairly short payoff.  Wait three years and you will have roughly the same amount to go and find the next deal.  Although the cap rate isn't outstanding, have you considered leveraging the current property?  Interest rates are low, and this might give you the best of both worlds.  You could potentially keep your property and find a new deal that cashflows a little better.  Best of luck!