Newest project.....BRRRR or Flip?!

[James Lauer]

Hey everyone,

I recently locked up a home in Brick township, New Jersey.... I am debating on just BRRRR'ing it or doing a quick fix and flip. I will try to keep this as short as possible for you all. Before I give the numbers, I think it is important to understand what I want out of life and real estate. I am NOT looking to be a Cardone type investor with thousands of rental properties, to me that seems like hell and just seems like trading one rat race for another. My 5 year goal is to have $20,000 a month in passive income (not focused on the amount of doors, but rather the amount of passive $). I am currently 31 and I am up to $5000 a month in passive income from RE. Here are the numbers and info on my latest deal. I look forward to hearing your responses!

Also one quick note: This is a townhome/hoa, which I am normally not a fan of. It seems well managed, I have not gone too crazy into the hoa budgets and accounting, but I would do a major deep dive, if I decided to keep as rental.

If I keep as a fix and flip. It is a straightforward flip that will take me approx. 3-4 weeks to complete and estimated profits are $30,000-$35,000.

If I keep it as a BRRRR here are what the numbers look like:

$145,0000 - Purchase Price + Closing Costs

$30,000 - Improvements 

$1,500 - General holding costs (taxes/insurance/utilities)

$2,900 - Loan on unsecured line of credit 

All in - $180,000

Comps are around $225,000, which would put me right at $168,750 (75% LTV), this means I would leave around $12-$15,000 invested in the deal after the refinance went through. 

Rent comps are around $2100 easily for a nicely redone townhome in this community. With conservative capex, hoa and taxes/mortgage I would be cashflow positive around $600-$625 per month from this unit. I love the cash on cash return ... 50% or so if my math is correct (please correct me if I am wrong here), but I am not thrilled that it is in an HOA. My area has seen an explosion in rent prices and the demand for them is absurd, this is the main reason, why I am thinking about holding this piece instead of flipping it. I really am leaning towards keeping this because of the strong cashflow, principal paydown and tax implications, but again, the HOA turns me off a bit.

I am open to any and all suggestions or comments! Thank you for reading this far, sorry if it was long

God bless,

James Lauer