BRRRR Vs Flip When And Why!!

[Steven Garza]

Hello BP community,

I am currently about half way through my 1st Flip or what I thought i was going to flip. How can I determine lets say if i wanted to rent out this property using the BRRRR method rather than just flipping it? Its a condo in Scottsdale AZ. Any and all help is appreciated.

Thank you.

[Ty Coutts]

Hey Steven,

You must consider a number of variables before making a decision. First, look at comparable rental properties on websites like Rentometer or Zillow to get a sense of the average rent you can charge. This will help you research the Scottsdale rental market. Next, figure out how much the entire rehab will cost and contrast it with the possible rental income. Make sure the renovation significantly increases value in order to support a higher rent. Subtract all costs (mortgage, property taxes, insurance, maintenance, property management fees, and HOA fees) from rental income to determine the estimated monthly cash flow. It takes positive cash flow to make a BRRRR investment profitable. Examine the post-rehab value (ARV) of the property to determine whether you can refinance and extract most or all of your original investment. Speak with lenders to learn about the conditions and criteria of refinancing. Examine the terms of financing. for keeping a rental property as opposed to selling, and take long-term investing objectives into account. For information about Scottsdale rental properties, check the HOA and municipal laws. Finally, in the event that the rental market underperforms, have a clear exit strategy in place, such as selling the property.

Hope this helps! Please feel free to reach out to me directly if you have any other questions or if you just want to discuss. 

P.S. I am a loan officer if you need assistance with any of the financing things I mentioned above!

[Steven Garza]

Quote from @Ty Coutts:

Hey Steven,

You must consider a number of variables before making a decision. First, look at comparable rental properties on websites like Rentometer or Zillow to get a sense of the average rent you can charge. This will help you research the Scottsdale rental market. Next, figure out how much the entire rehab will cost and contrast it with the possible rental income. Make sure the renovation significantly increases value in order to support a higher rent. Subtract all costs (mortgage, property taxes, insurance, maintenance, property management fees, and HOA fees) from rental income to determine the estimated monthly cash flow. It takes positive cash flow to make a BRRRR investment profitable. Examine the post-rehab value (ARV) of the property to determine whether you can refinance and extract most or all of your original investment. Speak with lenders to learn about the conditions and criteria of refinancing. Examine the terms of financing. for keeping a rental property as opposed to selling, and take long-term investing objectives into account. For information about Scottsdale rental properties, check the HOA and municipal laws. Finally, in the event that the rental market underperforms, have a clear exit strategy in place, such as selling the property.

Hope this helps! Please feel free to reach out to me directly if you have any other questions or if you just want to discuss. 

P.S. I am a loan officer if you need assistance with any of the financing things I mentioned above!

 Ty,

Thank you so much for the info, I will defiantly be taking you up on your offer to reach out. That is a lot of info to process for a first timer and i like to be exact or as close to as i can be when it comes to numbers.

Thank you!

[Ty Coutts]

Awesome man! Sorry, it is a lot. Take your time and I am here to help!

[Nelisa Lee]

Quote from @Steven Garza:

Hello BP community,

I am currently about half way through my 1st Flip or what I thought i was going to flip. How can I determine lets say if i wanted to rent out this property using the BRRRR method rather than just flipping it? Its a condo in Scottsdale AZ. Any and all help is appreciated.

Thank you.

First off, congrats on making it half way through your first flip!

Agree with all the points Ty has already made above as well. I would also say it depends on your goals and what your business currently needs. Do you need more quick capital? Can you afford to hold onto the property even if it sits vacant? Even if you BRRRR it, you might not get as much out of it as you could flipping it. I'm not familiar with the Scottsdale rental or retail market so that might also impact your decision. There's no right or wrong answer here and will highly depend on your current situation. There are properties I wished I kept but needed to sell at the time, (especially in the beginning of my investing career) and vice versa. If it was my first, I personally would flip it. Focus on building up more capital before holding onto rentals even if you BRRRR them out but every investor is different!

[Drew Sygit]

Figure out the projected rent and your ROI.

[Steven Garza]

Quote from @Ty Coutts:

Awesome man! Sorry, it is a lot. Take your time and I am here to help!

 Ty,

Good morning, I was wanting to know if we could schedule a time to speak after the 4th possibly beginning of next week? Let me know what your schedule looks like.

Thank you

[Steven Garza]

Quote from @Nelisa Lee:

Quote from @Steven Garza:

Hello BP community,

I am currently about half way through my 1st Flip or what I thought i was going to flip. How can I determine lets say if i wanted to rent out this property using the BRRRR method rather than just flipping it? Its a condo in Scottsdale AZ. Any and all help is appreciated.

Thank you.

First off, congrats on making it half way through your first flip!

Agree with all the points Ty has already made above as well. I would also say it depends on your goals and what your business currently needs. Do you need more quick capital? Can you afford to hold onto the property even if it sits vacant? Even if you BRRRR it, you might not get as much out of it as you could flipping it. I'm not familiar with the Scottsdale rental or retail market so that might also impact your decision. There's no right or wrong answer here and will highly depend on your current situation. There are properties I wished I kept but needed to sell at the time, (especially in the beginning of my investing career) and vice versa. If it was my first, I personally would flip it. Focus on building up more capital before holding onto rentals even if you BRRRR them out but every investor is different!

 Nelisa,

Thank you so much for the response, I can see why flipping it for the first one to build capitol makes sense. maybe the first few so that when I do decide to have a rental and if it does sit vacant i have funds available for the holding time. My goal is to get out of my 9-5 which is maybe why I'm wanting to start cash flowing asap lol. again thanks so much for the insight.

[Nelisa Lee]

Quote from @Steven Garza:

Quote from @Nelisa Lee:

Quote from @Steven Garza:

Hello BP community,

I am currently about half way through my 1st Flip or what I thought i was going to flip. How can I determine lets say if i wanted to rent out this property using the BRRRR method rather than just flipping it? Its a condo in Scottsdale AZ. Any and all help is appreciated.

Thank you.

First off, congrats on making it half way through your first flip!

Agree with all the points Ty has already made above as well. I would also say it depends on your goals and what your business currently needs. Do you need more quick capital? Can you afford to hold onto the property even if it sits vacant? Even if you BRRRR it, you might not get as much out of it as you could flipping it. I'm not familiar with the Scottsdale rental or retail market so that might also impact your decision. There's no right or wrong answer here and will highly depend on your current situation. There are properties I wished I kept but needed to sell at the time, (especially in the beginning of my investing career) and vice versa. If it was my first, I personally would flip it. Focus on building up more capital before holding onto rentals even if you BRRRR them out but every investor is different!

 Nelisa,

Thank you so much for the response, I can see why flipping it for the first one to build capitol makes sense. maybe the first few so that when I do decide to have a rental and if it does sit vacant i have funds available for the holding time. My goal is to get out of my 9-5 which is maybe why I'm wanting to start cash flowing asap lol. again thanks so much for the insight.

Absolutely - best of luck finishing up the rehab! Let us know what you end up doing with the property. 

[Ty Coutts]

@Steven Garza of course! Here is my Calendly link. Fill it out whenever you have the chance so we can schedule a call! https://bixel1.net/v1/t/c/91b5e4b9-4b00-a5bf-389a-27a02910a2...

[Adam Bartomeo]

Rule of thumbs:

You should always try and B&H as compounding interest will always overcome the short-term gain. 

You should avoid investing in condos.

The numbers will tell you to buy, flip, or hold.

[Bob Stevens]

Quote from @Steven Garza:

Hello BP community,

I am currently about half way through my 1st Flip or what I thought i was going to flip. How can I determine lets say if i wanted to rent out this property using the BRRRR method rather than just flipping it? Its a condo in Scottsdale AZ. Any and all help is appreciated.

Thank you.

 Simple answer, RE is all about math, simply run the numbers. My rule is, if I can make 3- 4 years' worth of rent on a flip in a month or so then I sell it. If you are only going to net about a year or two of rent on the flip keep it.  Remember wealth is built not flipped. 

All the best 

[John Morgan]

Never sell unless you need that cash. Buy in hold will make you very wealthy in 5-10 years. Flipping is a side job and won’t produce steady mailbox money for life while you vacation and nap.

[Bob Stevens]

Quote from @John Morgan:

Never sell unless you need that cash. Buy in hold will make you very wealthy in 5-10 years. Flipping is a side job and won’t produce steady mailbox money for life while you vacation and nap.

 Well, what if you purchased at a booming market, then it crashes? I 100% agree, (as I posted, wealth is built not flipped). If you can get 3- 4 years of rent on a flip in a couple months take it. If you're getting 15- 20% NET income per year, YES, it's a difficult choice. All my personals have never been less than 15% NET, most avg over the years at 20% +++. I sold many and kept many. It's all a balance. Now I will admit the biggest mistake of my life was not keeping 50 or so more of the 500 or so I flipped, cost me millions. Now we are keeping, 4 out of 10. This is a perfect example, what do I/you do? I just closed on another SF, ALL IN will be about 65k (value about 120- 125k) rent will be 1500ish so about 13k NET income, so 20% NET. Keep it or sell it in about 30days for 115k to an investor.? It's a good choice to have LOL . 

Keep crushing it 

[Ross Paller]

They say Cash is king. 

I really don't think that applies anymore as the number one advantage of Real Estate is the leverage (it's easy to get money for it).

However, You need cash reserves to make sure you stay in business and can keep building (both skills and wealth).

To answer the question of BRRR vs Flip - It's all about "do I have enough cash reserves to make sure I'm going to stay in business?" If the answer is yes, BRRR! No? Flip or even Wholesale.

I would be pretty conservative about answering that question. 

The ultimate goal is to hold real estate. However, each flip gives you more skills, better relationships with vendors, and more cash reserves. In time you will be doing nothing but buying to hold as long as you stay in the game long enough.

[Jeremy Holden]

If you plan to BRRR it, you should chat with a local lender about seasoning. You might find that you cant BRRR this until after the 12 month mark.

[Brett Tvenge]

Quote from @Steven Garza:

Hello BP community,

I am currently about half way through my 1st Flip or what I thought i was going to flip. How can I determine lets say if i wanted to rent out this property using the BRRRR method rather than just flipping it? Its a condo in Scottsdale AZ. Any and all help is appreciated.

Thank you.

 Hey Steven, curious what made you get into flipping now? Also what caught your eye in Scottsdale? Also why did you buy it with intention to flip but now considering rental? 

My thought's are Scottsdale is so saturated. Seem's like a very difficult place to have a successful first flip. Also with a BRRR as an exit strategy you might be leaving significant money into the deal.

I've been flipping in the valley for the last 5 years completed over 100 flips and this has been the most difficult now so I'm just curious what caught your eye now and why Scottsdale.