FLIP OR HOLD - Posted by TH

Posted by chris on October 15, 2003 at 21:33:56:

I personally would do a quick flip and reinvest a portion of the profit, while also paying down some of your personal debt.

FLIP OR HOLD - Posted by TH

Posted by TH on October 15, 2003 at 21:11:10:

Pheeeeeeeew! The wife and I got into a heated argument last night on our Real Estate investment. She would like to flip this house, and I would like to hold. This was an REO and we could sell with a 15k +/- profit after repairs.

Here’s the problem:

We are low on cash and could use the money from the flip to pay off debt… I insist on holding and borowing from the equity after the house has been completed to pay off debt…
Then we rent or rent to buy with Land contract and 20% down.
The Tenant is paying off our debt and we are creating equity at the same time. After we pay off debt with our new loan based on appraisal we find another REO and start over.

Re: FLIP OR HOLD - Posted by jasonrei

Posted by jasonrei on October 17, 2003 at 21:37:25:

I work with a partner. We collaborate on property values, repair costs, biz priorities, etc. When we don’t agree we always go with the safer, more conservative choice. When we disagree we try to persuade a little, but ultimately we go with the “weaker” choice. Your wife is opting for the conservative choice. I think you should probably go with her.

Of course, a marriage is different from my business partnership. My partner and I have similar goals and risk tolerance so we don’t butt heads much. Also, you may have ideas about what your roles are in a marriage. Maybe you and your wife shouldn’t be real estate partners, since you have different comfort levels.

Re: FLIP OR HOLD - Posted by ken in sc

Posted by ken in sc on October 16, 2003 at 12:00:00:

I say flip and use the money to pay off some debt and save some for reserves. Repeat this again, and then maybe again if needed.

When you say debt I assume it is not your personal residence but rather car loans, credit card, etc - what we call bad debt. If you are going to be in the rental business you must get your personal finances in order. The rental business produces some bad times in the first few years as you continue to learn the ropes. You could have 3 vacancies in one month. Having your bad debt paid off as well as some reserves in the bank will give you a lot of freedom financially. You will be surprised how little money you really NEED per month if you do not have bad debt payments. Then, you can buy rental property and acquire good debt, which is loans on appreciating property with kind tenants who agree to make the payments!


FLIP, FLIP, FLIP - Posted by Sean

Posted by Sean on October 16, 2003 at 11:42:38:

If CASH is your need, FLIP IT! Holding properites is a great way to slowly grow wealthy, but FLIPPING THEM gets you cash today.

Refinancing is a pain, bank will only go 75-80% of the properties value tops on a refi for investment property, don’t be thinking you’ll get a 100% refi on an investment property it ain’t gonna happen. THen you have to factor in their origination fees and other things… if you are going to see 15k if you retail it, you’ll be lucky to see much of anything doing the fix up refi scenario.

Concede to your wife the error of your ways, not only will you see your money, and avoid bank headaches… you’ll get brownie points for admitting you were wrong :slight_smile:

Re: FLIP OR HOLD - Posted by E.Eka

Posted by E.Eka on October 16, 2003 at 09:40:59:

Most gurus and everyone else on this board will tell you to take the cash. I agree. You ALWAYS have more options when you have cash. Paying off your debts is more important because in a way it makes you more liquid. If you pay down your debt, your debt to equity ratios and borrowing power substantially increase. The bank/lender will be more willing to work with you if they see that you’re almost debt free. With more cash, you can do another flip deal to increase your cash reserves and then switch your vehicle into another investment strategy like holding your property.

Take the cash - Posted by rm

Posted by rm on October 16, 2003 at 08:01:41:

There will be plenty of opportunities to hold investments at a later date.

Re: FLIP OR HOLD - Posted by Paul-FL

Posted by Paul-FL on October 16, 2003 at 07:15:26:

Look at this way, can you afford to hold the property until you get a TB in place plus pay for the rehab?

Re: FLIP OR HOLD - Posted by CS

Posted by CS on October 16, 2003 at 07:11:58:

It sounds like you need cash. Why not flip it and use the cash as seed money to grow your REI career?


Re: FLIP OR HOLD - Posted by raisismith

Posted by raisismith on October 15, 2003 at 22:45:24:

A 15k profit inmy opinion is not worth fliping the property,…I would do as you suggested and hold on to it and allow equity to grow and let the tenants pay off your debts,…I think that you might need to have someone else explain this to you wife,…because it sounds like she just wants to be right and not practicle