Buy and hold or flip?

[Rod Hansen]

At present, I have 5 residential rental properties. Not a bad gig. I like the monthly cash flow, the market value appreciation, principle pay-down and the equity I've built through rehab. All of them are cash flowing. But... I also like the idea of buying properties from wholesalers, fixing and flipping. Should I hold onto my rentals? Or should I sell them to free up cash for investing purposes?

[William Hochstedler]

@Rod Hansen

Selling a property to buy another property of the same type in the same market almost never makes sense because of costs of selling, acquisition, and tax ramifications. 

Also, with your current portfolio, you may be in a position to hammer on your debt through debt snowballing.  If you could free up a bunch of equity in a single property, that could be your source of funding for getting into new deals.

Moreover, real estate swings are incredibly cyclical.  It may only take a small interest rate hike to take the wind out of owner-occupant frenzy going on right now.

As far as buying from wholesalers, you can pay more than the competition if your strategy is buy and hold--again because you don't have the cost of selling. Folks here are calling it the BRRR strategy (Buy/Rehab/Rent/Refi).

Patience and diligence will win the day.