Between the BRRRR method and house flipping, which is better to start in? Both methods involve buying distressed properties and fixing them up. They differ after that point where with the BRRRR method the investor rents it out and refinances. The Fix and flip method after renovating the house, the investor will sell it.
The magic of the BRRRR method happens behind the scenes. Instead of an obvious profit at the sale of property that both you and the IRS easily see, many of the BRRRR strategy benefits are how it impacts your balance sheet.
1. While faster than buy and hold, it is generally slower than flips. 2. You have to deal with ongoing ownership of rental properties.
The fix and flip method’s idea is to make money by buying a distressed house, renovating it, and selling it for more money than you have invested in it. This is easier said than done but can be very lucrative for a real estate investor.
1. You get feedback on whether what you are doing is making money quickly. 2. Less moving parts than BRRRR. 3. Potential to scale faster
1. You have more complicated renovations because getting it that last mile will impress a buyer. 2. When you lose money on a flip, you do not have the long tail of positive cash flow from rent to take some of the sting away.