Is it better to brrr or just get a new conventional loan

[Alisha Destulien]

I started in this investing game last year with my husband. We purchased a house and flipped it to get that cash in the beginning.  We then purchased a house for $30k cash and rehabbed it and rented it.  It is now worth $65k. We are looking to expand our portfolio and buy more rentals.  Would you suggest to do a brrr method to get the cash out and buy another house or would you go conventional and put 20% down!?  We have been approved for a conventional loan, but trying to figure out which is the best way to go!   Thank you 

[Bryce Jamison]

There's no right or wrong answer. It depends on your goals and risk tolerance, well and the numbers.

You'll definitely be able to scale faster by utilizing leverage via the BRRR method, but you'll decrease the monthly cashflow from this property and you'll now have a loan to pay every month. If you go this route ensure you have a beefy emergency fund for when your renter stops paying rent, trashes your unit, there's a capital expense, or some life event prevents you and your husband from bringing in income.

Since you'll only be able to pull out 80% of the home value doing this you'll also want to determine if it makes sense to pay the fees to only get out 52K. I'm going to guess with today's interest rates once you see what your monthly payment would be vs the rent you're bringing in you may not want to move forward with this option.