First Property Complete! Now What?? BRRR or Build some reserves?

[Melissa Thomas]

I am a full-time marketing manager and I JUST wrapped up my first STR remodel after 6 LONG months. I went over budget of course but my husband and sunk in a good 60K on property renovations and took on extra debt to renovate an A Frame property near a popular tourist destination. I was also able to work out additional rehab work (including outdoor living space and updates) with my contractor on a trade agreement for marketing consulting. Which is great, because I was able to add value to the home without the extra cash out of pocket.

I have been live on Airbnb and VRBO for just about 3 weeks and we have hit over 13K in reservations through the first week of August alone. This is incredibly promising but is our busy season, and do not expect these numbers year-round. But cash flow is better than anticipated. I put 20% down initially, have paid 6 months of mortgage payments, and have forced appreciation.

We purchased the home with a 15-year conventional mortgage and considering a BRRR to purchase the next property, possibly refinancing into a DSCR under our LLC. The challenge is that we took on CC debt for the remodel and our scores dropped a good amount in the last 6 months. Is it better to sit and collect the cash for a while and pay down the debt that way? Are there creative ways to restructure the debt with a BRRRR to do this?

Our initial goal was to let the cash accumulate and not touch it until we had another 20% built up for another property, but not sure I want to wait a couple of years to do that. Does anyone have advice on the best possible strategies on if it makes sense to pay the debt first if I could even BRRRR with a score in the mid 600s right now? Not sure the best path forward to continue building our portfolio, ideally with another STR this year.

thank you!