How to properly BRRRR

[Korey Scott]

Hey all! I have found a lot of potential properties around a new casino in my area. Some need work others will rent as is. My question and I know it’s a broad question, so I expect broad answers. When I do a rehab on a property and the end result is worth more than what I can get in rent, do I refinance it to keep it at the 1% rule? Or do I refinance for the full value? Or if the numbers make enough sense do I sell it? Any and all advice is welcome. Thank you for your time.

[Jason D.]

In an ideal situation, the refinance, at a minimum, will allow you to recover all of the cash you put into it, and still have good cash flow. If the value is there to cash out more than you have into it, then you can balance how much additional cash you want vs. your cash flow comfort level. The decision to sell or hold is totally a personal choice. I wouldn't turn a BRRRR into a flip, unless there was major profit involved. Remember, flip profits are taxed at a much higher rate than rental income.