BRRRR and scaling quickly

[Justin Pumpr]

Hey all,

I'm at a bit of a quandary with my RE investing goals. My goal was to BRRRR multifamily properties in San Antonio, TX as the rents are generally rock solid there and the purchase prices are relatively low. One of the issues I'm finding in terms of numbers with the BRRRR method is the refinancing part. As an investment property the max you can cash out refi on a property is upto 70% of LTV. This means the appraised value of a rehab has got to be VERY high to be able to get my money back out and still cash flow. Even on single family properties the max is 75%. By leaving so much money in the deal, I'm unsure about how to scale this quickly. Like most people I want to achieve financial freedom. I understand this doesn't happen over night, but at $200/door I need around 50 doors to be able to achieve my goals.

My questions:

1) How do you scale quickly when so much cash is tied up in your assets?

2) Is BRRRR on multifamilies the right path, or is BRRRR-ing SFRs actually a better option? There are lots of "it depends" in this I'm sure, but I'd love to hear from people who have successfully managed this and at scale. Is it simply a case of not finding the right properties?

Thanks!

[Rick Pozos]

If you have a bunch of money left in the deal, it is because you paid too much to begin with. You should be at 70% to 75% after everything. this way you DONT have a bunch of cash left in the deal.

Also, about $200 per month: Once you get more deals, you put extra money into getting 1 or 2 paid off. Then you start to have $600 to 800 per property cash flowing. When you have 1 house, you put the cash flow + your own $500 into the mortgage every month.

When you have 5 houses, you are collecting $1000 per month. You still put all that AND $500 per month into the first deal. The first deal will be paid off in 7 or 8 years. All you have to do is buy 1 house per year and put as much as you can into the house to pay it down quick. This is your retirement, so you can cut your 401k and put that into the pay down also.

You got to be Frugal AND make lots of money to be put towards the real estate.

-FrugalRealEstateGuy