Underwrite
Flip vs rental: which path fits the numbers?
Same address, two strategies. Flip path: all-in cost, ARV, selling costs, hold time → profit and rough annualized gain. Rental path: stabilized rent, expenses, loan → cash flow and CoC. See both on one sheet so a wholesaler's "flip this" pitch has to beat a hold story (or lose).
Assumptions
Returns stack
- Flip profit
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- Flip annualized
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- Rental monthly CF
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- Rental CoC
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When to use
Distressed deals that could go either way; choosing after a contractor bid lands; killing a flip when rental CoC already clears your hurdle.
When not to
Flip profit ignores your time and execution risk. And tax treatment differs - not tax advice on either path.
Assumptions: Flip: profit ≈ ARV − selling costs − all-in (purchase + rehab + hold). Rental: standard NOI → CF → CoC on stabilized assumptions. No capital gains tax module.
Worked examples
Input
Flip profit $40k in 6 months Rental CoC 9% on cash left in
Output
Different risk clocks
Flip is lump-sum and time-bound; hold is recurring cash flow.
Input
Thin flip margin + strong rent
Output
Hold may win on paper
ARV optimism kills flips; rent optimism kills holds - same discipline.
Common traps
- Flip profit ignores your time and execution risk.
- ARV optimism kills flips; rent optimism kills holds.
- Tax treatment differs - not tax advice.