Finance now or later?

[Patrick Ng]

Hi everyone, 

I am continuing to try and apply BRRRR principles and could use some insight on a deal I have under contract.

Deal specifics:

Single family home, contract price 120k, currently valued as is 170k(seller wants out), if light repairs (about 10k) ARV 185-190k. Rental price 1500-1600/mo.

My questions are:

Would you acquire with cash for 120k, repair, then refinance(and pull out 75% of 185 ARV) and hold as a rental.

OR

Finance at 4.875%, 30 year fixed to acquire the property at 120k with 20% down(24k), repair(10k) and rent with the fixed financing in place. (leave 34k in the deal and refinance at a later date)

Just finished reading @David Greene's book, and learning about the velocity of money concept of using cash and refinancing and using for the next deal. But with the current price of this home under contract, it already is going to be acquired under market value without  having to use a cash offer. I see some advantage in making a 20% down payment at the 120k price, and keeping the cash/credit I have on hand to acquire the next deal and BRRRRing that one. I figure that with reserving the purchasing power for the next deal, the cash on hand will allow me to obtain the next one sooner rather than waiting until I can refinance out of the one I currently have under contract. What would you do? 

Any thoughts would be greatly appreciated!

Thanks!

[Rothy Soun]

I would say depends on if you needed the cash now to go and get another property or you can wait and get the lower APR rate. I would do the cash with fix APR.