100k profit on 1st flip- now what?

Question

I’m about to finish up my first flip! I’m so excited! I’ve always said “ if I just had 100k I’d turn it into 100 million...

Welll.. now what haha.

We are going to profit about 200k (hopefully more) off this flip. My cut will be 100k. I want to be smart with my next move and appreciate any suggestions!

I have a about 60k in student loan debt but I’m not sure if I should pay that off or keep re investing this money. I’ve become obsessed with listening to all the BP podcasts, they are so helpful! I want to eventually buy rental properties and keep flipping.

I’m still learning about the money side of investing and all the different ways to fund deals. I live in Boston, MA currently so out of state investing has interested me a lot!

Any help/ suggestions/ guidance is greatly appreciated! :)

Greg Dickerson · Answer

Do as many flips like this as you can right now. Do not use the cash to pay off the loans. Use it to to cover you while you keep flipping as many properties as you can right now while the market is hot because it will not be this hot forever so you want to make as much cash as you can right now, invest the cash into multifamily properties then pay of loans with cashflow from the rental properties.

Will Barnard · Answer

I’m going to take a different approach here from the others. Only you can decide what is best for you as some of the advice appears to be a “must do”.

You were successful in your first flip with your partner. Identify what mistakes were made (there must have been a few small once’s at minimum), identify what you did right and how you did that. Identify what you do the best out of all the tasks performed on this flip and same for your partner. Then divide the tasks up based on who did what the best for best results moving forward. How did you get the first deal? Can it be repeated and if so, identify how you will do so for the second and more importantly for scale in future.

Not sure how you are affording your student debt payments but I have always gone with the notion that if I use leverage and create debt, so long as the money I am getting can be invested in an asset that produces a higher return, I have created arbitrage and could then pay down that debt with said arbitrage. Step and repeat that and you will find the best way to pay off your debt. That may be in one lump sum, or over time, but your analysis and your abilities will tell you exactly what is best for you.

Congrats and good luck.

Bob B. · Answer

I'd set aside any taxes you will have to pay and then keep flipping.

Hamill Alex · Answer

@Brenna Crowe

Everyone has their own opinion relative to the amount of risk they are comfortable with. If you’re that successful with flipping and can continue to make that margin you should be able to do both. (Pay of student loan debt and flip.) Considering where we are at in the life cycle of the market, I would personally be apt to paying off my debt and only doing deals with a short turnaround time. Paying off debt will also provide a better debt-to-income ratio moving forward when you’re looking to use residential financing for longer holds. You would have a much better platform to scale with when the market takes a turn. I would also have a backup plan for your flips. Meaning, choose properties that could sustain a 15-20% drop in the market and still allow you to break even. Good luck.

Andrew Hogan · Answer

100% agree with @Greg Dickerson, 10X your results and re-invest it into income-producing properties.

Brenna Crowe · Answer

@Rory Gill thank you!

Brenna Crowe · Answer

@Will Barnard very helpful, thank you!

Brenna Crowe · Answer

@David Barnett thank you! It was in Scituate! I would love to talk more, I want to look into out of state Investing but am nervous about it.

David Barnett · Answer

@Brenna Crowe Congrats on a successful first flip.  What is the blended interest rate of the student loans?  Was the flip in Boston, or somewhere else?  I'm a bit concerned with the values in Boston proper, and wouldn't want to take on really long projects in case the market shifts.  I invest out of state (buy and hold), and please let me know if there's anything I can help with as you move forward with your investing/decision making.

David Barnett · Answer

@Brenna Crowe Congrats on a successful first flip.  What is the blended interest rate of the student loans?  Was the flip in Boston, or somewhere else?  I'm a bit concerned with the values in Boston proper, and wouldn't want to take on really long projects in case the market shifts.  I invest out of state (buy and hold), and please let me know if there's anything I can help with as you move forward with your investing/decision making.

100k profit on 1st flip- now what?

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