The BRRRR Method...what are the rules?

[Justin S.]

Hey everyone. I have a question/situation that I'm hoping I can get some guidance with. 

I bought my house in 2015, with the intent of one day turning it into an income property. I put 20% down to avoid PMI, with the help of some family assistance. The house had been renovated before I bought it (bathrooms and kitchens), and when I moved in I replaced the roof, put up a shed, and fenced in the yard. I have other projects that I intend to complete still as well.

I am getting married in November and promised my fiance that I would focus on RE education until then...My question is, is it too late to BRRRR this property and use the funds to repay my family member/potentially buy my next income property after I get married? I think I know how the BRRRR Method works, but I'm not sure how it applies to my situation. I may be totally off as well!

Any and all assistance is greatly appreciated. I hope to meet some biggerpockets members at the Long Island REIA meeting April 10th! Thanks all!

Best, Justin

[John Warren]

@Justin S. you can always do a cash out refinance on your primary residence, although this is not the only option. Since you put down 20% I would recommend looking into a HELOC as well. I imagine the financing you have on the property is very good, and it might be nice to use the home equity line of credit instead since you could then take advantage of having equity while still maintaining the better interest rate from 2015.

I used both a cash out refinance and a HELOC when I purchased my first property in 2015 in Lyons, IL. It was the best financial decision I ever made. I always liked the saying "you can't eat equity".