Recently a new member of Bigger Pockets posed a good question. Why keep any properties long-term if you can make 30-40% ROI reselling a property.
I had an answer in my head, but being the number crunching type of guy I am I wanted to see what the actual numbers would look like.
Here is a spreadsheet I made to answer the question. I made some assumptions:
I ran three properties I decided to keep as rentals. Property A was an average deal, Property B and C are both pretty good deals (as far as discount achieved).
If you can get to 10 free and clear rentals you would be pulling in roughly $55,000/year after taxes for managing those 10 properties and you could stop looking. You would have to flip 3-4 properties a year (EVERY YEAR) to achieve about the same after tax profits.
I still buy-sell 15-25 houses a year because I need to generate additional investment capital. But I think investors are making a big mistake if they completely overlook purchasing rentals when prices are at these levels. If I included the 2006 value of Property A, B, C and did another run with that being the disposition price the landlord would make even more.