Potential BRRRR (or Flip)

[Neel Patel]

Hi everyone! I just picked up a shell property in a booming area in Philadelphia. Original plan was to flip it, then started considering renting because of the area but now, I think the original plan of flipping might be the best route. I want to get feedback on my analysis and thought process on the two options. 

• Purchase Price with closing: $130,000
• Rehab: ~$80,000
• Total all in cash: $210,000
• ARV: $270,000 on average (low-end would be 250k and high-end would be $300k but a house just a block away appraised for $325k recently with lower finishing than what I am planning)

If we flipped the property:

• Closing costs: $21,600
• Net: $36,900

If we refinance and then rent:

• Rent: $1400 (but could be $1600 based on other comps)
• Tax: $100
• Insurance: $200
• All utilities: tenant responsibility
• Property Management (10%): $140 (we would self-manage but I like to build this number in my calculations)
• Vacancy (5%): $70
• Repairs (5%): $70
• CapEx (5%): $70
• Net: $750

With only a net of $750, pulling out our cash via refinance the property would put us in a negative cashflow. Our loan payments would be roughly $1100+  a 30-year mortgage with a 5.5% rate. 

Are there any flaws in my numbers? Anything I should be considering? Anything I am missing? I feel like we'd walk away with more money by flipping. Open to all feedback.