House flip or hold and rent?

[Randy Dargan]

Looking at a house for sale that needs work. At my offer price and market rates I believe it could work for a flip or BRRRR method.

Cincinnati market west side

LP 100,00

Offer price 80,000

Sold comps 140-160k

Potential rent 1200-1400avg/mo

Rehab cost 20k

If I get it for 80,000 put 20,000 into it. 100,000 all in can sell for 140ish or hold on to for 1400 in rent (1% rule)

Would you recommend BRRRR method or just get all the profits and move on?

I have one other rental property too. SFH

Thanks BP

[Evan Polaski]

@Randy Dargan I still don't really understand the desire to BRRR properties, especially in these currently high market prices.

I was explaining this in another forum but here goes:

ARV of $140
Refi at 75% - $105,000 gross (will have fees associated)
Loan terms will likely be 20 yr am, if commercial, and in the 4.75% range

Principle + Interest =                 679
Management Fee =                    140
Vacancy 5% =                              70
Repair reserves =                        70
Capital reserves =                       70
Taxes (Using Delhi @ 80k) =       170
Insurance =                                 50
Total =                                   1,249
Free Cashflow =                         151
Annualized cashflow-              1,821

# of years to make back 40k from flipping, 22 years

Tax benefits will vary in value to each person.  And appreciation cannot be quantified.  But if you think we are in for a correction soon, there may be no appreciation in your hold period.