High Appraisal for a BRRRR

[Brenton Fowler]

Hello, I'd like to pose a hypothetical situation. I'm curious on how members of this community would handle it.

Let's use a typical BRRRR example, buy for $50k, $25k rehab, with the hopes of a $100k ARV and $1k rent. In the case of a $120k appraisal, what would you do?

Let's assume you plan to do more BRRRRs over the next 3-5 years, and are currently funding the initial purchases using private money at 10% interest. Mortgage recasts are not available after refinancing.

Option 1: Get a $75k loan, have a $150/mo cash flow.
Option 2: Get a $90k loan, have $80/mo in cash flow.

Is it better to have the additional cash flow over the life of the 30 year loan based on the $75k loan
or
Is it better to take on additional mortgage debt to reduce the need for private money over the 3-5 year time frame?

[Ashley Cross]

I think its best to take all the equity you can now. Rates are at a historical low and I think its safe to assume that rents will continue to increase overtime. Unless there is a huge negative cashflow or a small cashflow that you can't sustain.