Need guidance - rent or flip ?

[Mark Monroe]

I’m hoping to get some guidance/opinions on whether to flip or rent.

I've done a couple successful flips in the past, but in March my wife and I purchased a SFH with the intention to keep this one for a rental. However, after looking at the market and consulting with a realtor, we are now undecided as to whether or not we still want to rent or would rather just sell it.

Here's the numbers - the home is a one story brick ranch with 3 bedrooms and 1.5 baths on the main level, and an extra bedroom/bonus room in the basement. The rest of the basement is unfinished and also has a single car garage. Total finished is 1300 sf. The home is in Danville VA. Traditionally the RE market has lagged in this area but Caesar's is building a casino in town, and has already opened up a temporary building that opened up last month. That has the RE market very hot.

It took a couple of months of working with the seller through some issues but ultimately we purchased the property for $50k cash in March.

Since then we’ve put close to another $50k in rehab - all new floor coverings, new plumbing, hvac, some electrical, new kitchen, gutted the bathrooms, framing repairs, new doors, fixed basement walls, etc. I also owe a friend a $5k finders fee — so all said and done we will be all in for $105k.

A realtor I’ve used in the past did a walk through, pulled comps and determined we could list for $175-$180k and likely get multiple offers - with a sale price $185k or so. Based off all the recent sales I’ve seen I feel that’s definitely doable. After realtor commission and paying taxes, we would profit about $45-$50k if we went this route.

Based off comps for rent, we could get $1100 per month. Since we don’t owe anything, the only expenses would be insurance ($460 per year), taxes ($500 per year), vacant percentage (I used 10 percent for $110 monthly ) and maintenance (I did $100 per month). After calculating this I’m coming up with $800 cash flow per month.

I have read about and seen plenty of videos about the BRRRR method. Seems like a very good option and makes sense the way it has been utilized by many others. However- if we did that at these higher interest rates and got our $105k back thru a cash out refi, the payment would be $782 for a 20 year fixed or $663 for a 30 year. Then we would barely be cash flowing…I suppose we could wait and refi once rates come back down but who knows how long that will be.

The calculations I’m running show total profit after 30 years at $680k if we did not refinance. For that calculation I put the sell price as $350k in 30 years.

On the “flip” side, if we sold the home and collected $150k after commissions, taxes, etc, invested the money at a conservative 7% (S&P is historically higher in the long run) over the next 30 years that would be $1.1 million.

Another option would be to sell and then just put the $150k in a money market getting 5% right now until perhaps another deal comes along.

On paper to me taking the money and moving on seems like the right move, but perhaps I’m missing something here.

So what do you guys think? Is the profit from the flip too good to pass up or is there more that I need to consider here.

I appreciate any input, thanks.