How To CORRECTLY Choose Whether To Flip Or Rent A Property

Flipping
How do I choose whether I want to flip or keep a property as a rental? There are a bunch of things to consider and we will address them in this video!

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The first thing to address is that most real estate investors are locked into one strategy. If you talk to certain people they might say:

“I’m a house flipper”
“I’m a wholesaler”
“I’m a buy and hold guy”

The best investors are a combination of all three. When you limit yourself to just one exit strategy, you can never maximize the deal. Getting deals aren’t easy! So when you do get one, you have to make sure you maximize it to its best use.

The first evaluation I will run is the house flip. How much profit will I make if I choose to flip this house? We will then blast it to our buyers list to see how much we can make if we were to wholesale the property. If the house flip makes 2x or more of the wholesale fee, then we will flip it. If its less then we will take the wholesale fee. It’s just not worth it at that point to flip it with the risk when we can take the quick risk free profit.

The next evaluation we will do is does this make sense as a rental? We will compare how much we make as a flip, wholesale, and then how much cash flow we could make as a rental.

Here is the thing with rentals. In most places it just doesn’t make sense and you can’t cash flow. In Las Vegas where I’m at, I almost never keep a home as a rental. They just never cash flow and the profit we can make flipping is really good. But if you’re in the midwest or somewhere there is good cash flow, then you need to seriously evaluate whether to keep or flip.

If it came down to making $400 a month in cashflow or $13,000 on the flip, I’m going to take the cash flow. So you need to look at all those things.

The other thing to take into account is your money situation. If you have very limited money, you may not have the choice. You have to wholesale or flip the home. Keeping your business alive is far more important than squeezing everything you can out of a deal. So money will always play a factor on what you do with a deal.

There are more complex ways to look at this such as Internal Rate of Return or Cash on Cash Return. But for most people watching this channel, the factors I explained are going to be the most important.

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