Would you.... BRRRR?

[Levi Lewis]

If you purchased a house cash for 20k, put 15k into rehab with an ARV of 75k would you BRRRR? Im wondering if having no loan on the property is worth more than smaller cash flow and potentially doing it all over again.

[Bonnie Williams]

Hi @Levi Lewis ,

I think you're asking if you should refinance or leave your cash in. If that is the case, it may depend if you can get a loan or the cost of a loan. Noting that I'm no expert, I would shop some mortgage options... this means you will have the conversation with several lenders, products (loan options/costs) vary greatly.

You currently have 35k in and refinancing will require (I assume) you to leave in 15-20%, or $11,000 -$15,000. Plus, you will have to pay closing costs, let's say $4,000.

Let's say you're in for $15,000 (20%) down + $4k in costs = $19,000. Now you cash out $60k.

Weather you finance out or not depends a lot on if you have any other funds to work with, if you NEED the money now, or if you just feel better if you have the cash in the bank. If you are collecting great rent, maybe you save yourself the 4k in closing costs and pay yourself back (save) before doing the next deal.

I have a business partner so we cash out as much as possible to reduce our liability exposure (The less money we have in the property, the less someone could potentially sue for) and so we can keep as much money available for growing our business as we can. But, I still love the idea of having a paid off property and saving closing costs and interest payments.

As far as tax advantages of financing or not, you should consult an accountant. Maybe another member could drop some knowledge here.

Hope this helps some!