BRRR CoC Return Ideal

[Amy H.]

I’m begun evaluating a rental property that I own for a cash out refi.

I know people will say I shoot for X% for me to want to do a rental deal initially. But is that before or after the cash out refi? Is there any ideal Cash on Cash return that you shoot for to decide how much you take out for the refinance?

Do you take out enough just so you can to cash flow X amount or do you just take out all your cash/the most you can? Do you shoot for the highest CoC return possible and risk having more cash tied up or pull out the most cash you can to have more money for your next investment? Do you do a mix of both of those? What's your goal that you go for?

For a bit of a background- we are trying to buy at least 1-2 SFH a year. So I'd like to pull out money, but also trying not to be so over leveraged. I wanted to get ideas from others of a good balance between having cash to invest and not being over leveraged.

[Jim D.]

I do a lot of these, and usually take out the most I can. I can earn above 20% with the money I pull out, so if they are only charging me 5% to borrow it, I will take all I can get as long as I am still cash flow positive.