Fix-and-Flip vs. Fix-and-Rent: David Brown Breaks Down the Best Path for New Investors

Written By David Brown

When it comes to real estate investing, new investors often face a pivotal question: Should I flip a property for a quick return or hold it as a rental for long-term cash flow?

As the founder of Brown Capital LLC and manager of Lockwood Fund 2, I’ve executed both strategies across dozens of properties in Columbia, SC, and Nashville, TN. Each method has its strengths, risks, and ideal timing—and your choice depends on your goals, your risk tolerance, and how quickly you want to grow your portfolio.

In this article, I’ll break down the key differences between fix-and-flip and fix-and-rent (aka the BRRRR method) to help you make the smartest decision for your investment journey.

What Is Fix-and-Flip?

Fix-and-flip is exactly what it sounds like: Buy a distressed or undervalued property, renovate it quickly, and resell it at a higher price.

Pros:

  • Quick cash returns – Profits can be realized in 3–6 months.

  • No tenant headaches – No need to manage renters or ongoing maintenance.

  • Market timing advantage – You can capitalize on rising home prices.

Cons:

  • Higher taxes – Flips are taxed as ordinary income (not capital gains).

  • More market risk – A downturn can crush margins if you can’t sell fast.

  • Financing constraints – Short-term loans and higher interest rates can cut into profits.

What Is Fix-and-Rent (BRRRR)?

The BRRRR strategy stands for: Buy, Rehab, Rent, Refinance, Repeat — a method that builds equity and passive income over time.

Pros:

  • Cash flow – Monthly rental income provides steady, recurring revenue.

  • Equity growth – As tenants pay down your mortgage, you build long-term wealth.

  • Tax benefits – Depreciation, mortgage interest, and capital gains treatment can be advantageous.

Cons:

  • Requires patience – Returns are slower, but more sustainable over time.

  • Tenant risk – Vacancies and problem renters can hurt cash flow.

  • Refinance challenges – A weak appraisal or rising interest rates can impact your ability to cash out equity.

David’s Advice for New Investors

If you’re just getting started and need liquidity, a flip might make sense—especially if you have a good contractor and a solid ARV estimate. But if you want to build lasting wealth, BRRRR offers compounding growth and a portfolio you can scale over time.

Pro tip: Start with one of each. Flip one to build cash reserves, then BRRRR the next to generate passive income. This combo strategy is what has powered Lockwood Fund 2 to deliver strong, consistent returns for our investors.

Final Thoughts: What’s Right for You?

There’s no one-size-fits-all answer—but there is a smart path forward. Whether you fix-and-flip or fix-and-rent, the key is buying right, renovating efficiently, and aligning the strategy with your financial goals. And remember: You don’t have to go it alone. At Brown Capital LLC, we partner with both new and experienced investors through Lockwood Fund 2—a real estate investment fund focused on single-family opportunities in high-growth markets.

Want to learn more or invest alongside us?

Email me directly at dbrown@browncapital.net or visit www.BrownCapital.net

David Brown