REI question

[svsooner]

Hello all,
Long time lurker, first time poster. I recently put in a bid to purchase a hud foreclosure. I offered 50k and comps in the area are selling between 61k-63k. If my wife and I are awarded the bid, she wants to rent it out and I want to flip it. If we rent it, we could have a positive cash flow of around $200-$270 per month. If we flip, we could make around 7k-8k. Is there a "rule of thumb" that you guys go by to determine which is better?

[Dan Auito]

Hello all,
Long time lurker, first time poster. I recently put in a bid to purchase a hud foreclosure. I offered 50k and comps in the area are selling between 61k-63k. If my wife and I are awarded the bid, she wants to rent it out and I want to flip it. If we rent it, we could have a positive cash flow of around $200-$270 per month. If we flip, we could make around 7k-8k. Is there a "rule of thumb" that you guys go by to determine which is better?

Glad to see you have come out of the bleachers SV. My move would be to hold this property as it would have great cashflow, you can with a little digging get an equity line for say $10,000 and only pay about $150.00 a month to use it, still leaving you with a positive cashflow of $50-$100 a month and you STILL own the property!

Buy and Hold is one of the best ways to create wealth in real estate, unless you could make a quick $20,000 right off the top I would hold it letting it go up in value while the tenants pay the principle down, atleast for a year anyway to avoid those killer short term capital gains taxes! :wink:

P.S. By letting Momma have some say in the matter, she will eventually let you do more real estate as well, that's a big plus in itself! :SM029:

[eldorado]

Well, How about the best of both worlds !!!

Ahh geeze ! I cant cut and paste a quote here..

'Anywhoo... Use Dans methods of pulling some equity out of the property

Then...

To keep the monthly income up and pay the mortgage..:SM088:

Instead of renting it, sell it on a contract (record the paperwork with the county so all the buyer has to do is get a refi instead of a purchase-thus guarenting he/she will be able to cash you out)

Charge a few points above prime with a 1 year ballon to someone who needs a home that might have a hiccup in their credit profile of divorce or whatever.

Now youve satisfied your need for monthly income (not to mention the money your making on interest)

And you flipped the property as well :SM022:

If they skate on the deal, take it back and sell it again:SM025:

Guarenteed to keep the marriage alive:icon_buss