Is BRRR for me?

[Chelsea Carr]

Hello,

Having listened to the BP podcast for 3 years, my wife and I decided to purchase our first property in January 2022. The property is mixed zoned with 3,700 sq ft.  The building is split into two equal halves as it was used by independent medical practices.  As we own and operate a salon, we decided one half would become a salon/studio apartment and the other half two apartments.  This allows us to pay mortgage and insurance solely through apartment generated income.  Construction began in March 2022 and completed mid-October 2022.  The initial purchase price was $240,000 with a build cost of $230,000.  We now have a nail technician, esthetician renting the studio, massage therapist, hair stylist, and both apartments rented.  The building produces $4,650 per month with a mortgage and insurance payment of $1,694 per month.  

We are now considering how to grow our real estate portfolio. The BRRR principle is very appealing, but scary at the same time. We contacted a local credit union for options. If refinanced, our properties mortgage payment would climb to $3,700 before insurance (which is $250 per month). The $3,700 payment is assuming the building appraises at $600,00 with 80% equity being available for use. The credit union has no idea what the property is worth until appraisal. This will cost thousands of dollars, and with high interest rates, I am not sure this is the move.

We are looking at purchasing a 5 acre property this summer to start an RV park. Since funds are depleted from buying/renovating last year, we are considering all options to continue our real estate journey. My Dad has expressed interest in partnering for the RV park, but this is very preliminary. Are there any options we haven't considered? We already have a HELOC against our primary residence so this would not be an option.

Thanks to any and all for consideration! We look forward to hearing and becoming contributing members of the Bigger Pockets family!