Need help on one deal - BRRRR

[Alon A.]

Hey guys

I finished remodeling and im in a re finance process now, im already holding house 3 months for seasoning time.

Im doing the BRRRR, the money i put down for this property is around 40K (for title and hard money expanses)

i have equity in property.

I have already also renter that pays $2400

My hard money landing pay off is 226K.

Property appraised at 345K.

Re finance cash out is 80% so its 276K. Closing costs will be around 20K

it means that i can take around 30-35K to my pocket, but rate will be around 9% for mortgage. it means monthly payment of $2300-2400.

On the other hand my re finance lender can give me loan of rate and term of 7.75% payment of $1981 monthly and cash flow $419 per month.

My question is :  I should break even and take the money or have cashflow in property and pay less mortgage .

[Matthew Drouin]

@Alon Attias

I'm a BRRRR investor that uses this method on larger commercial deals.

I’ve done both scenarios.

I would leave that “extra” cash into the deal and cashflow.

The reason why, is you want to think long term. If you are looking to scale, banks are going to want to see properties you own with positive cash flow to evaluate your strength as a borrower.

If you have properties that cash flow negatively, this could hurt you. It’s hurt me.

I would just take the win and then use your original investment capital and do your next deal and recycle that capital over and over again.

Or better yet. Because you’ve started a proven track record using this method, start raising capital from others to eliminate access to your own capital as a bottleneck to your growth.

So you can go after larger deals. If your goal is financial independence, then you can chunk into this goal faster by doing larger deals.

It took me 13 years to earn my financial independence doing smaller deals. And when I swam upstream into larger opportunities I was able to replace my wife’s income with just one larger deal.

Either way, congratulations!