Exit Strategies: When to Flip, Hold, or Wholesale

You found a great deal. Now what?

Flip it for quick profit? Hold it for cash flow? Wholesale it to another investor?

The wrong exit strategy can cost you tens of thousands of dollars.

Here's the decision framework that determines which strategy makes the most money.

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The Three Exit Strategies

1. Fix & Flip

What it is: Buy, renovate, sell to retail buyer

Timeline: 3-6 months
Capital required: High ($50K-$200K+)
Profit potential: $20K-$80K+ per deal
Tax treatment: Ordinary income (taxed as business income)

Best for: Investors with capital, rehab experience, and time to manage projects

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2. Buy & Hold (Rental)

What it is: Buy, renovate (optional), rent long-term

Timeline: Hold 5-30+ years
Capital required: Moderate to high ($20K-$100K+ down payment)
Profit potential: Monthly cash flow + appreciation + tax benefits
Tax treatment: Passive income with depreciation benefits

Best for: Investors building wealth, want passive income, can manage tenants

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3. Wholesale

What it is: Assign contract to another investor, collect fee

Timeline: 7-30 days
Capital required: Low ($500-$5,000 earnest money)
Profit potential: $5K-$30K per deal
Tax treatment: Ordinary income (taxed as business income)

Best for: Investors with limited capital, don't want rehab headaches, want quick cash

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The Decision Framework

Use this flowchart to determine your exit strategy:

Question 1: Do You Have Capital?

NO → Wholesale

• Requires minimal capital ($500-$5K earnest money)
• Get paid in 2-4 weeks
• Build cash reserves for future flips

YES → Continue to Question 2

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Question 2: Do You Have Rehab Experience?

NO → Wholesale or Turnkey Rental

• Flipping without experience = costly mistakes
• Wholesale until you learn the business
• Or buy turnkey rental (minimal rehab needed)

YES → Continue to Question 3

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Question 3: Does the Deal Cash Flow?

Calculate: Monthly rent - (mortgage + taxes + insurance + maintenance + vacancy)

YES (positive cash flow) → Consider holding as rental
NO (negative or break-even) → Flip it

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Question 4: What's Your Time Horizon?

Need money now (0-6 months) → Flip or Wholesale
Building wealth (5-30 years) → Hold as rental

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Question 5: What's the Profit Spread?

Flip profit after all costs: $40K+ → Flip
Flip profit after all costs: $15K-$40K → Flip or Hold (your choice)
Flip profit after all costs: Under $15K → Wholesale or Hold

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When to Flip

✅ Flip When:

1. High profit margin (ARV spread 25-35%+)
2. You have capital ($50K-$200K liquid)
3. Property won't cash flow as rental (too expensive relative to rents)
4. You need liquidity (building capital for next deals)
5. Strong retail buyer market (low inventory, high demand)
6. Appreciating market (prices rising 5%+ annually)
7. Property is in A/B neighborhood (appeals to owner-occupants)

Example Flip Scenario:

Property: 3/2 house in nice DFW suburb
Purchase price: $180,000
Rehab: $40,000
Holding costs (4 months): $8,000
Closing costs (buy + sell): $12,000
Total investment: $240,000

ARV: $310,000
Net profit: $70,000

Decision: FLIP
Why: Strong profit margin, nice area attracts retail buyers, quick exit

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When to Hold (Buy & Hold Rental)

✅ Hold When:

1. Property cash flows ($200-$500+/month after all expenses)
2. Strong rental demand (low vacancy, growing population)
3. You have time horizon (5-10+ years to hold)
4. Good school district / job growth (attracts quality tenants)
5. You want passive income (not just one-time profit)
6. Tax benefits matter (depreciation, interest deduction)
7. Appreciation potential (emerging market, path of progress)

Example Hold Scenario:

Property: 3/2 house in solid B neighborhood
Purchase price: $140,000
Rehab: $20,000
Total investment: $160,000

Monthly rent: $1,800
Mortgage (20% down, 7%): $1,070
Taxes + insurance: $350
Maintenance/vacancy (15%): $270
Total expenses: $1,690

Monthly cash flow: $110 ($1,320/year)

Plus:

• Tenant pays down mortgage ($400-$600/month equity buildup)
• Property appreciates 3-5%/year ($4,800-$8,000/year)
• Tax benefits (depreciation shield)

Decision: HOLD
Why: Positive cash flow, equity buildup, appreciation, long-term wealth building

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When to Wholesale

✅ Wholesale When:

1. Limited capital (under $20K available)
2. Deal is good but margins are thin (not enough profit to flip)
3. You don't have time (too busy with other projects)
4. Property needs heavy rehab (beyond your skill level)
5. You need quick cash (assignment fee in 2-3 weeks)
6. Market is uncertain (don't want to hold risk)
7. You're new to investing (learning without big capital commitment)

Example Wholesale Scenario:

Property: 3/2 house needing full gut renovation
Seller asking: $120,000
ARV: $240,000
Estimated rehab: $60,000

Your MAO (at 70% rule): $108,000
You contract at: $115,000
You wholesale for: $125,000
Your assignment fee: $10,000

Decision: WHOLESALE
Why: Heavy rehab beyond your experience, quick $10K with minimal capital

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The BRRRR Strategy (Hybrid Approach)

BRRRR = Buy, Rehab, Rent, Refinance, Repeat

This combines flipping + holding:

1. Buy distressed property with cash or hard money
2. Rehab to increase value
3. Rent to tenant
4. Refinance with conventional loan (pull cash out)
5. Repeat with recycled capital

When BRRRR Works:

✅ Property in good rental area
✅ Deep value-add opportunity (can force appreciation)
✅ ARV supports 75-80% LTV refinance
✅ Rents cover refinanced mortgage payment
✅ You have capital for initial purchase + rehab

Example BRRRR:

Purchase: $100,000
Rehab: $30,000
Total investment: $130,000

ARV: $180,000
Refinance at 75% LTV: $135,000
Cash back: $135,000 - $130,000 = $5,000

Result: You own a cash-flowing rental with almost all your capital back to deploy again

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Market Conditions Impact Your Strategy

Hot Seller's Market (Low Inventory, High Prices)

Best strategy: Wholesale or Hold
Why: Thin flip margins, bidding wars, retail buyers compete with investors
Hold because properties will appreciate
Wholesale to investors who can still make margins work

Balanced Market

Best strategy: Flip or BRRRR
Why: Good margins available, predictable comps, moderate competition

Buyer's Market (High Inventory, Falling Prices)

Best strategy: Wholesale or Quick Flip
Why: Longer hold times = higher carrying costs
Avoid buy-and-hold until market stabilizes
Quick flips work if you can move fast

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Your Resources Determine Your Strategy

Limited Capital (Under $20K)

Best options:

1. Wholesale (requires $500-$5K)
2. Partner with experienced flipper (50/50 split)
3. House hack (buy duplex, live in one side)

Moderate Capital ($20K-$100K)

Best options:

1. Buy-and-hold rentals (20% down)
2. Small cosmetic flips
3. BRRRR strategy

Strong Capital ($100K+)

Best options:

1. Multiple flips simultaneously
2. Build rental portfolio (3-5 properties)
3. Commercial real estate
4. Fund other investors' deals (hard money lending)

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Tax Considerations

Flipping

Tax treatment: Ordinary income (same as W-2 wages)
Tax rate: 10-37% federal + state
Self-employment tax: 15.3% on first $160K
Benefit: None (fully taxable)

Example: $50K flip profit = $20K-$25K in taxes

Buy & Hold Rental

Tax treatment: Passive income
Tax rate: Ordinary rates on cash flow
Benefits:

• Depreciation (shields $3K-$10K/year from taxes)
• Interest deduction (mortgage interest)
• Expense deductions (repairs, management, travel)
• 1031 exchange (defer capital gains when selling)
• Long-term capital gains (15-20% vs. ordinary rates)

Example: $10K annual cash flow - $8K depreciation = $2K taxable income

Winner for taxes: Buy & hold

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Risk Comparison

Lowest Risk → Highest Risk:

1. Wholesale (minimal capital, quick exit)
2. Buy & hold rental (steady cash flow, long timeframe to recover)
3. BRRRR (refinance risk, tenant risk)
4. Fix & flip (market timing risk, rehab risk, carrying costs)

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Can You Do Multiple Strategies?

Absolutely.

Most successful investors use all three:

Example portfolio:

• Wholesale 5-10 deals/year for cash flow ($50K-$100K income)
• Flip 2-3 properties/year for larger profits ($80K-$150K)
• Hold 1-2 rentals/year to build long-term wealth

Why this works:

• Wholesale generates operating capital
• Flips provide large profit injections
• Rentals build passive income and net worth

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The Biggest Mistake Investors Make

Choosing an exit strategy before analyzing the deal.

Don't say "I'm a flipper" and force every deal into that box.

Let the deal tell you the best exit.

Some properties are perfect flips. Others are goldmine rentals. Some should be wholesaled immediately.

Run the numbers for all three strategies, then choose the most profitable.

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Quick Decision Matrix

Factor	Wholesale	Flip	Hold
Capital needed	Low	High	Moderate
Timeline	2-4 weeks	3-6 months	5-30 years
Experience required	Beginner	Intermediate	Intermediate
Profit per deal	$5K-$30K	$20K-$80K	$200-$500/mo
Tax efficiency	Low	Low	High
Risk level	Low	High	Moderate
Time commitment	Low	High	Moderate

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The Bottom Line

There's no "best" exit strategy—only the best strategy for each deal.

Ask yourself:

1. Do I have the capital?
2. Do I have the time?
3. Does it cash flow?
4. What's the profit margin?
5. What are my goals (quick cash vs. long-term wealth)?

Answer those questions, and the right exit becomes obvious.

PropPipeline helps you find deals that work for any exit strategy—whether you're wholesaling, flipping, or building a rental portfolio.

Join PropPipeline today and start finding deals that match your investment goals.