Seeking advice: Cashing out ~$300,000 after 1st year investing

[Noelle B.]

Hi! My name is Noelle and I'm an investor on Long Island in NY. 

My husband and I started investing a year ago and found some pretty great deals. Specifically, we did one flip and two BRRRRs, and we're on the "refinance" part of the two BRRRRs right now. 

Since we purchased the two rentals ~60% below market, we have quite a bit of equity. After paying off our private lender and the debt we've accrued to rehab the properties, we'll be left with ~$300,000. 

My question to the experienced investors on BP is: what would you do? 

To me, this is a relatively large sum of money to have and I want to make the right decision. Here are a few things I know:

1. We do not want to continue BRRRR'ing single family homes. It is our goal to move into larger commercial deals as soon as possible.

2. We are not afraid to invest out of state. 

3. We have a healthy appetite for risk in terms of taking on projects that maybe others wouldn't, but the equity needs to be there to mitigate this kind of risk. 

That's all! We're new and would love some guidance from other BP'ers who have been in the game, specifically commercial. What would you do!? Thanks!! 

[Todd Rasmussen]

@Noelle B.

If you have enough to do what you want to do, do it. If you need more, then just repeat what you guys just did. Not sure the draw to leave something you know works for something that is unknown, but that's the beauty of the free market. Do whatever you want to do.

Objectively, investing in one place is more efficient but there is some diversification risk. Going in with more up front capital versus more of a loan is safer for cash flow but then it's all tied up. There are pros and cons to every situation and anyone that tells you what you SHOULD do is really just sharing what they think would work best for them. It should be a subjective decision based on what you guys want to do based on objective information about your options.

It's most important to keep sight of where you are and where you are going. My wife and I sit down at least twice a year and go over our books and make some strategic planning decisions. I think you two should do the same. Don't be afraid to sit on your equity for a little bit to make sure your expense assumptions are solid before you start increasing them. You don't want to find out two years from now that you are really cash flow negative and the equity you pulled out is only breaking even on your next endeavor.

Rates are going up but newish investors tend to hyper focus on the difference 1% makes on a loan repayments. I don't think you have to rush into a refi if you aren't convinced your cash flow assumptions are correct.

It sounds like you guys are off to a fantastic start, so as long as you weigh opportunity costs against your potential investments you should be just fine. Sorry for four paragraphs qualifying your question without actually telling you what to do.