Buy & Hold vs. Fix & Flip - What are the numbers telling me?

[Matt Hardy]

I recently watched the @Brandon Turner and @David Greene webinar on the 90-day call to action for real estate investing and have since begun to analyze as many deals as I can in my spare time.  My question came up as a result of using the Rental Property calculator and looking at the future cash flow/return model...

Most listings in my market (San Diego) don't come close to passing the 1% rule... however, I still run the numbers to start looking at how close I can get to positive cash flow and what has a bigger impact on the numbers (purchase price, reno costs, etc.).  I noticed that in most cases my cash flow was negative, or barely breaking even (the median home price is $600k+ here, most people don't rent for $6,000/mo if you follow the 1% rule).  However, I also saw that in some cases my Year 1 or Year 2 "Annualized Total Return" was huge - from 65% to 150% in some cases... I'm still honing in on renovation costs, etc. to make sure this is accurate... but in these scenarios would it make more sense to do a "flip" and exit immediately rather than buy & hold? Am I missing something?

Thanks,

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Matt