As always, we ran the numbers first, then evaluated the best approach based on the space and floor plan. Let’s break it down.

📍 The Deal

• Property: 3 bed / 1.5 bath

• Purchase Price: $85,000

• Renovation Costs: $30,000

• Closing & Holding Costs: $9,000

• Total Investment: $124,000

• After-Repair Value (ARV): $170,000

• Refinance Amount (75% LTV): $127,500

This is a textbook BRRRR opportunity, allowing us to pull out 100% of our investment at refinance.

💰 Base Scenario: Keep It Simple

If we rent it as a 3 bed / 1.5 bath, the expected rent is $1,450/month.

• Cap Rate: 11.37%

• Monthly Net Cash Flow: $258.88

• DSCR: 1.28

Solid numbers—but we saw potential for more.

🛠️ Upgrade #1: Add Full Bathroom + Closet

There’s a large family room next to the laundry room, which gives us a chance to add a bathroom (plumbing is conveniently located to tie in) and a closet—turning the home into a 4 bed / 2.5 bath.

• New ARV: $180,000

• New Rent Estimate: $1,600–$1,675

• Permit + Construction Cost: +$10,000

• Total Investment: $134,000

• Refi Amount (75% LTV): $135,000

• Monthly Net: $319.28

• Cap Rate: 11.70%

• DSCR: 1.32

It works—but requires permits, longer timelines, more inspections, and more risk for a modest reward.

🧩 Upgrade #2: Add Closet Only

Skip the bathroom, just add a closet to convert the space into a 4 bed / 1.5 bath.

• New ARV: $175,000

• Expected Rent: $1,550/month

• Budget: Remains at $124,000

• Refi Amount (75% LTV): $131,250

• Cap Rate: 12.28%

• Monthly Net Cash Flow: $353.88

• DSCR: 1.62

This is our best buy-and-hold scenario—highest cash flow, no permits, and full capital return.

🔄 Secondary Strategy: Turnkey Flip Exit

But we always consider multiple exits, and here’s where the Turnkey Flip strategy comes in.

After stabilizing the property, we could sell it to another investor for $155,000, hitting the 1% rule for them at $1,550/month rent.

• Net Profit After All Expenses: ~$18,000

• Capital Gains Tax: Estimated at $5,400

• Net After Taxes: $12,600

Now compare that to holding it as a rental for three years:

• Monthly Net Income: $353.88

• 36 Months of Cash Flow: $12,739.68

At first glance, the income is nearly identical. But here’s the kicker: by keeping it as a rental, we also:

• Offset income with depreciation and expenses

• Benefit from appreciation

• Keep long-term tax advantages like 1031 exchanges or stepped-up basis

Holding builds wealth and flexibility. Flipping generates quick, taxable income. Both have value—but holding gives us the gift of time, tax strategy, and portfolio growth.

🧠 Final Takeaway

Each time we buy, we build in multiple exits. The market shifts, financing changes, life happens. By evaluating cash flow, equity, taxes, and risk, we choose the strategy that works best for our portfolio today—and our goals tomorrow.

Building long-term wealth, one property at a time.