Do you pick the property for the rehab discount or for the rent it'll produce in year five?

What I keep going in circles on, after six months of research and no deals, is which end of BRRRR to shop from.

One way to look at it: the discount is where the money is made. You buy the ugliest house on the block, the one nobody else will touch, because that spread between what you pay plus rehab and what it appraises for is the entire engine of getting your capital back. Distressed inventory seems to be getting easier to find, so this end is where the opportunity is. Rent it to whoever will rent it, the numbers work because you bought right.

The other way: you're building a rental portfolio you're going to hold for a long time. The rehab is a one-time event and the tenancy is a fifteen year relationship. So you should shop for the street, the school zone, the kind of house that attracts a tenant who stays four years, and accept a thinner discount to get it. A great deal on a house in a place you don't want to own in 2035 isn't a great deal.

I genuinely don't know which one I'd act on if a deal landed tomorrow. In practice most people probably say "both" but the two rarely show up in the same listing, and when they conflict you have to pick.