To BRRRR tenant occupied or buy section 8 tenant occupied?

[Haaroon Malik]

I'm having a hard time deciding if I should BRRRR a tenant occupied property after the tenant leaves or buy section 8 tenant occupied?

The BRRRR property is $115k with an ARV of $180k. This is tenant occupied till April, rent is at $1200 a month bringing in negative cashflow of $225 a month. After the lease ends, I'm looking at least $25k for rehab and will be able to increase to $1800-$1900. So that's about 9 months before I can cashflow. 70% of ARV is $126k - $25k for repairs is $101k. I would love to start getting into BRRRR and start getting infinite cashflow but this seams it my not be the right property to do that with.

The section 8 tenant occupied property is going to cost $100k-$105k and is rented for $1800 a month that cashflows $625 a month.

Which property should I pursue?

[Jessie Dillon]

it sounds like the post-BRRR cashflow would be about 500/mo, right? IF your monthly debt service cost is the same after the refinance. some things to note:

- consider annual appreciation for each property if long term wealth-building is a priority for you

- consider how easy or challenging it will be to manage each property based on location, neighborhood quality, etc

- consider whether or not you can handle the 9mo of negative cashflow with the BRRR

- consider how much money you truly have to start with right now and if either situation will leave you feeling strapped

- consider than renovations usually take twice as long and are twice as expensive on your first try

- consider that there are other deals out there you could BRRR better, so it's not one or the other, it's one or the other or neither/wait

- consider that lots of banks will allow you to do 80% LTV for the BRRR refi, but you'll also be paying closing costs