Having Trouble with the BRRRR Method and Spreadsheet

[Phil Petite]

Hello Everyone!

I have two rentals in Memphis. Both are 3BRs, and they both have Section 8 tenants in place. One home is being rented for $1100/month and the other is getting $1250/month. Both homes were purchased in cash, so I do not have any debt on either property.

I'd love to do a cash-out refi on either home in order to buy another rental, but I am not sure if I'm missing something with the BRRRR method and would appreciate some guidance.

Current Rentals' ARV: $125k for both (slightly conservative # here)

Purchase Price for 3rd/new rental: $100K

Rehab Needed: $2.5k (tenant currently in place, just needs punch list items taken care of)

Gross Rental Income: $1500/month

I guess what I'm having difficulty with is how much I'll be able to receive back from the re-fi that I can use towards the purchase of this 3rd property. I calculate that 75% of the ARV on a home worth $125k is around $93k, but this is where I get a bit lost in the process.

Any advice/guidance would be amazing!! Thank you in advance!!!

[Nate Herndon]

Hi @Phil Petite, that's a really good question. The cash that you will receive from your cash-out refinance is going to be pretty straightforward - if the property appraises for $125,000, and you opt for a 75% LTV cash-out, the total loan will be $93,750. Since you do not have a payoff, you will only have closing costs to be deducted from that $93,750 figure.

If we want to use round numbers and say that all lender, title, insurance, and taxes total $7500 in closing costs, then you would receive $93,750 - $7500 = $86,250 at closing.

The clients that I work with on refinances in Memphis are all cash-flowing really well, so I love the idea of picking up another property there. The financing that would be available for purchases will be 80% LTC. For both the refinance and the purchase, the terms would be 30-year fixed and prepayment penalties ranging from 5 years to none at all (depending on the program utilized).

Here's a quick peek at my DSCR calculator - you would only need to hit a 1.00 DSCR in order to pick up 75% LTV.

[Nate Herndon]

Hi @Phil Petite, that's a really good question. The cash that you will receive from your cash-out refinance is going to be pretty straightforward - if the property appraises for $125,000, and you opt for a 75% LTV cash-out, the total loan will be $93,750. Since you do not have a payoff, you will only have closing costs to be deducted from that $93,750 figure.

If we want to use round numbers and say that all lender, title, insurance, and taxes total $7500 in closing costs, then you would receive $93,750 - $7500 = $86,250 at closing.

The clients that I work with on refinances in Memphis are all cash-flowing really well, so I love the idea of picking up another property there. The financing that would be available for purchases will be 80% LTC. For both the refinance and the purchase, the terms would be 30-year fixed and prepayment penalties ranging from 5 years to none at all (depending on the program utilized).

Here's a quick peek at my DSCR calculator - you would only need to hit a 1.00 DSCR in order to pick up 75% LTV.

[Jordan Ray]

Quote from @Phil Petite:

Hello Everyone!

I have two rentals in Memphis. Both are 3BRs, and they both have Section 8 tenants in place. One home is being rented for $1100/month and the other is getting $1250/month. Both homes were purchased in cash, so I do not have any debt on either property.

I'd love to do a cash-out refi on either home in order to buy another rental, but I am not sure if I'm missing something with the BRRRR method and would appreciate some guidance.

Current Rentals' ARV: $125k for both (slightly conservative # here)

Purchase Price for 3rd/new rental: $100K

Rehab Needed: $2.5k (tenant currently in place, just needs punch list items taken care of)

Gross Rental Income: $1500/month

I guess what I'm having difficulty with is how much I'll be able to receive back from the re-fi that I can use towards the purchase of this 3rd property. I calculate that 75% of the ARV on a home worth $125k is around $93k, but this is where I get a bit lost in the process.

Any advice/guidance would be amazing!! Thank you in advance!!!

Here is what I would do. First do cash-out refinances on both properties. Make sure that before you do that, each property will cash-flow. Assuming they still cashflow and you proceed to do a cash out refi. Then take that money and use it on a 100% purchase and rehab on a BRRRR property where all your numbers make sense. (ARV x 70% - rehab = contract price/offer) I just had a buyer client lock up a BRRRR deal using hard money loan with Avalon Capital in Memphis. The ARV on this deal and with purchase and rehab. His ARV was $170K and he closed with only 7K. Just imagine how many deals you can buy with all that equity you have. If you need any help with this strategy, reach out. I help my clients do successful BRRRR deals all the time. I also buy myself. Goodluck!

Also, This refinance strategy on those properties is a 10 year interest only DSCR with a 30 year principal afterwards keeping his payment low for a few years so he can refi at a better rate and with more equity and keep more cashflow. He will not benefit from early equity by paying principal in his payment but will benefit from the cashflow. He also will refi again to a better DSCR loan when the rates are better. Solid strategy.

[Evan Polaski]

@Phil Petite, is your issue in realizing you will not be getting all your equity back out of the deal?

If so, while that is the "ideal" scenario of a BRRRR, it doesn't always happen. For those deals to happen, you need to find deals with a bigger spread between all in purchase + renovation costs, strong rents to cover DSCR, and strong ARVs that support an LTV.

Many people, when looking at properties, will back into the purchase price. When looking at a property, start with your assumed ARV and rent, i.e. $125k ARV and $1,100/mo rent (clearly using some of your numbers, since Nate did some of my calculations on it).

So max Loan on ARV is 93,750. Let's assume, in a more traditional BRRRR, the renovation is $30k to get it rentable and decent. So that means you can pay $63,750 for the house. If they are asking $100k, you are unlikely to buy for $63k, so you walk away. Or, you accept that you will have some equity locked in the house for a while, and still buy it.

But the second test is your rent level and DSCR test. So you know when you get it stabilized, you can get $1,100/mo. At the end of the day, most lenders that I have worked with will want a 1.25x DSCR. Let's assume annual tax at $1,200 ($100/mo) and Insurance at $800/yr ($75/mo). Some lenders will also take in some estimated repair expenses, so let's call that $100/mo. My lender NOI is now: $825/mo. At a 1.25 DSCR, that means my P&I payment cannot exceed $660/mo. At 8% interest, 30 yr am, that means I cannot borrow more than $89k, if I pay all loan costs.

So again, just because you can't get all your equity out doesn't mean you shouldn't refi the property and pull what you can. And when you are buying another property, you need to know what the lender's LTV on your value AND their DSCR tests will be, so you can start backing into which deals are more likely to get all your cash out versus others.

[Phil Petite]

Quote from @Nate Herndon:

Hi @Phil Petite, that's a really good question. The cash that you will receive from your cash-out refinance is going to be pretty straightforward - if the property appraises for $125,000, and you opt for a 75% LTV cash-out, the total loan will be $93,750. Since you do not have a payoff, you will only have closing costs to be deducted from that $93,750 figure.

If we want to use round numbers and say that all lender, title, insurance, and taxes total $7500 in closing costs, then you would receive $93,750 - $7500 = $86,250 at closing.

The clients that I work with on refinances in Memphis are all cash-flowing really well, so I love the idea of picking up another property there. The financing that would be available for purchases will be 80% LTC. For both the refinance and the purchase, the terms would be 30-year fixed and prepayment penalties ranging from 5 years to none at all (depending on the program utilized).

Here's a quick peek at my DSCR calculator - you would only need to hit a 1.00 DSCR in order to pick up 75% LTV.

Awesome post, Nate!!! Thank you SO Much!!! Your explanation helped me understand this strategy quite a lot more!

The new home that I'm looking to buy (just using round numbers): $125k ARV, rented with tenant already in place for $1500/month, minimal repairs needed. Now, if I can buy this home for, let's say, $95k-$100k (and assuming I can pull out about $85k-$86k based on your calculations), would it still make sense to go after this 3rd rental property? I think this is where I am getting stuck, so any advice would, again, be greatly appreciated. :)

[Phil Petite]

Quote from @Jordan Ray:

Quote from @Phil Petite:

Hello Everyone!

I have two rentals in Memphis. Both are 3BRs, and they both have Section 8 tenants in place. One home is being rented for $1100/month and the other is getting $1250/month. Both homes were purchased in cash, so I do not have any debt on either property.

I'd love to do a cash-out refi on either home in order to buy another rental, but I am not sure if I'm missing something with the BRRRR method and would appreciate some guidance.

Current Rentals' ARV: $125k for both (slightly conservative # here)

Purchase Price for 3rd/new rental: $100K

Rehab Needed: $2.5k (tenant currently in place, just needs punch list items taken care of)

Gross Rental Income: $1500/month

I guess what I'm having difficulty with is how much I'll be able to receive back from the re-fi that I can use towards the purchase of this 3rd property. I calculate that 75% of the ARV on a home worth $125k is around $93k, but this is where I get a bit lost in the process.

Any advice/guidance would be amazing!! Thank you in advance!!!

Here is what I would do. First do cash-out refinances on both properties. Make sure that before you do that, each property will cash-flow. Assuming they still cashflow and you proceed to do a cash out refi. Then take that money and use it on a 100% purchase and rehab on a BRRRR property where all your numbers make sense. (ARV x 70% - rehab = contract price/offer) I just had a buyer client lock up a BRRRR deal using hard money loan with Avalon Capital in Memphis. The ARV on this deal and with purchase and rehab. His ARV was $170K and he closed with only 7K. Just imagine how many deals you can buy with all that equity you have. If you need any help with this strategy, reach out. I help my clients do successful BRRRR deals all the time. I also buy myself. Goodluck!

Also, This refinance strategy on those properties is a 10 year interest only DSCR with a 30 year principal afterwards keeping his payment low for a few years so he can refi at a better rate and with more equity and keep more cashflow. He will not benefit from early equity by paying principal in his payment but will benefit from the cashflow. He also will refi again to a better DSCR loan when the rates are better. Solid strategy.

Aggressive strategy, Jordan! I like it!!! :)

I think I'd just pull the money out from only one of the two rentals that I already have, which are both cash-flowing (tenants are in place for both). I'm going to take the weekend to digest all this wonderful info from you and the other posters here, and I'll post again on Monday. Have a great weekend!

[Jordan Ray]

Quote from @Phil Petite:

Quote from @Jordan Ray:

Quote from @Phil Petite:

Hello Everyone!

I have two rentals in Memphis. Both are 3BRs, and they both have Section 8 tenants in place. One home is being rented for $1100/month and the other is getting $1250/month. Both homes were purchased in cash, so I do not have any debt on either property.

I'd love to do a cash-out refi on either home in order to buy another rental, but I am not sure if I'm missing something with the BRRRR method and would appreciate some guidance.

Current Rentals' ARV: $125k for both (slightly conservative # here)

Purchase Price for 3rd/new rental: $100K

Rehab Needed: $2.5k (tenant currently in place, just needs punch list items taken care of)

Gross Rental Income: $1500/month

I guess what I'm having difficulty with is how much I'll be able to receive back from the re-fi that I can use towards the purchase of this 3rd property. I calculate that 75% of the ARV on a home worth $125k is around $93k, but this is where I get a bit lost in the process.

Any advice/guidance would be amazing!! Thank you in advance!!!

Here is what I would do. First do cash-out refinances on both properties. Make sure that before you do that, each property will cash-flow. Assuming they still cashflow and you proceed to do a cash out refi. Then take that money and use it on a 100% purchase and rehab on a BRRRR property where all your numbers make sense. (ARV x 70% - rehab = contract price/offer) I just had a buyer client lock up a BRRRR deal using hard money loan with Avalon Capital in Memphis. The ARV on this deal and with purchase and rehab. His ARV was $170K and he closed with only 7K. Just imagine how many deals you can buy with all that equity you have. If you need any help with this strategy, reach out. I help my clients do successful BRRRR deals all the time. I also buy myself. Goodluck!

Also, This refinance strategy on those properties is a 10 year interest only DSCR with a 30 year principal afterwards keeping his payment low for a few years so he can refi at a better rate and with more equity and keep more cashflow. He will not benefit from early equity by paying principal in his payment but will benefit from the cashflow. He also will refi again to a better DSCR loan when the rates are better. Solid strategy.

Aggressive strategy, Jordan! I like it!!! :)

I think I'd just pull the money out from only one of the two rentals that I already have, which are both cash-flowing (tenants are in place for both). I'm going to take the weekend to digest all this wonderful info from you and the other posters here, and I'll post again on Monday. Have a great weekend!

Good stuff man! Glad I can help! Goodluck to you!

[Phil Petite]

Quote from @Evan Polaski:

@Phil Petite, is your issue in realizing you will not be getting all your equity back out of the deal?

If so, while that is the "ideal" scenario of a BRRRR, it doesn't always happen. For those deals to happen, you need to find deals with a bigger spread between all in purchase + renovation costs, strong rents to cover DSCR, and strong ARVs that support an LTV.

Many people, when looking at properties, will back into the purchase price. When looking at a property, start with your assumed ARV and rent, i.e. $125k ARV and $1,100/mo rent (clearly using some of your numbers, since Nate did some of my calculations on it).

So max Loan on ARV is 93,750. Let's assume, in a more traditional BRRRR, the renovation is $30k to get it rentable and decent. So that means you can pay $63,750 for the house. If they are asking $100k, you are unlikely to buy for $63k, so you walk away. Or, you accept that you will have some equity locked in the house for a while, and still buy it.

But the second test is your rent level and DSCR test. So you know when you get it stabilized, you can get $1,100/mo. At the end of the day, most lenders that I have worked with will want a 1.25x DSCR. Let's assume annual tax at $1,200 ($100/mo) and Insurance at $800/yr ($75/mo). Some lenders will also take in some estimated repair expenses, so let's call that $100/mo. My lender NOI is now: $825/mo. At a 1.25 DSCR, that means my P&I payment cannot exceed $660/mo. At 8% interest, 30 yr am, that means I cannot borrow more than $89k, if I pay all loan costs.

So again, just because you can't get all your equity out doesn't mean you shouldn't refi the property and pull what you can. And when you are buying another property, you need to know what the lender's LTV on your value AND their DSCR tests will be, so you can start backing into which deals are more likely to get all your cash out versus others.

This is also an amazing post! Thank you, Evan!!!

I think where I keep getting stuck, and you made a great point about possibly not being able to pull out all the equity (which I'm honestly fine with), is that I am unsure if the approximately $93k that I could pull out from one of my two currenty properties will be enough to fund the 3rd, which will cost about $100k all-in. I think it's OK though based on your calculations, but please let me know what you think. Thanks so much, again!!!

[Phil Petite]

Quote from @Jordan Ray:

Quote from @Phil Petite:

Quote from @Jordan Ray:

Quote from @Phil Petite:

Hello Everyone!

I have two rentals in Memphis. Both are 3BRs, and they both have Section 8 tenants in place. One home is being rented for $1100/month and the other is getting $1250/month. Both homes were purchased in cash, so I do not have any debt on either property.

I'd love to do a cash-out refi on either home in order to buy another rental, but I am not sure if I'm missing something with the BRRRR method and would appreciate some guidance.

Current Rentals' ARV: $125k for both (slightly conservative # here)

Purchase Price for 3rd/new rental: $100K

Rehab Needed: $2.5k (tenant currently in place, just needs punch list items taken care of)

Gross Rental Income: $1500/month

I guess what I'm having difficulty with is how much I'll be able to receive back from the re-fi that I can use towards the purchase of this 3rd property. I calculate that 75% of the ARV on a home worth $125k is around $93k, but this is where I get a bit lost in the process.

Any advice/guidance would be amazing!! Thank you in advance!!!

Here is what I would do. First do cash-out refinances on both properties. Make sure that before you do that, each property will cash-flow. Assuming they still cashflow and you proceed to do a cash out refi. Then take that money and use it on a 100% purchase and rehab on a BRRRR property where all your numbers make sense. (ARV x 70% - rehab = contract price/offer) I just had a buyer client lock up a BRRRR deal using hard money loan with Avalon Capital in Memphis. The ARV on this deal and with purchase and rehab. His ARV was $170K and he closed with only 7K. Just imagine how many deals you can buy with all that equity you have. If you need any help with this strategy, reach out. I help my clients do successful BRRRR deals all the time. I also buy myself. Goodluck!

Also, This refinance strategy on those properties is a 10 year interest only DSCR with a 30 year principal afterwards keeping his payment low for a few years so he can refi at a better rate and with more equity and keep more cashflow. He will not benefit from early equity by paying principal in his payment but will benefit from the cashflow. He also will refi again to a better DSCR loan when the rates are better. Solid strategy.

Aggressive strategy, Jordan! I like it!!! :)

I think I'd just pull the money out from only one of the two rentals that I already have, which are both cash-flowing (tenants are in place for both). I'm going to take the weekend to digest all this wonderful info from you and the other posters here, and I'll post again on Monday. Have a great weekend!

Good stuff man! Glad I can help! Goodluck to you!

Jordan, here is question for you (or for anyone posting in this thread!):

My main goal is to create more cash flow, so if you were in my shoes, would you try for the 3rd deal using a cash out re-fi on either of my two current rentals, if that that 3rd deal's numbers look like this? 

3rd property - All-in cost: $105K, ARV: $125K, rental amount: $1500/month (tenant already in place). I would be able to pull about $93k out of one of my current rentals by doing a cash out re-fi, and then I'd use that towards the purchase of this 3rd rental that would gross $1500/month.

I guess my main question is: is this a good deal if I buy it at $105K if it rents for $1500/month? I think the numbers are solid if I can get that cash out re-fi for one of my two current properties, but I'd like to hear yours and others' thoughts.

[Jordan Ray]

Quote from @Phil Petite:

Quote from @Jordan Ray:

Quote from @Phil Petite:

Quote from @Jordan Ray:

Quote from @Phil Petite:

Hello Everyone!

I have two rentals in Memphis. Both are 3BRs, and they both have Section 8 tenants in place. One home is being rented for $1100/month and the other is getting $1250/month. Both homes were purchased in cash, so I do not have any debt on either property.

I'd love to do a cash-out refi on either home in order to buy another rental, but I am not sure if I'm missing something with the BRRRR method and would appreciate some guidance.

Current Rentals' ARV: $125k for both (slightly conservative # here)

Purchase Price for 3rd/new rental: $100K

Rehab Needed: $2.5k (tenant currently in place, just needs punch list items taken care of)

Gross Rental Income: $1500/month

I guess what I'm having difficulty with is how much I'll be able to receive back from the re-fi that I can use towards the purchase of this 3rd property. I calculate that 75% of the ARV on a home worth $125k is around $93k, but this is where I get a bit lost in the process.

Any advice/guidance would be amazing!! Thank you in advance!!!

Here is what I would do. First do cash-out refinances on both properties. Make sure that before you do that, each property will cash-flow. Assuming they still cashflow and you proceed to do a cash out refi. Then take that money and use it on a 100% purchase and rehab on a BRRRR property where all your numbers make sense. (ARV x 70% - rehab = contract price/offer) I just had a buyer client lock up a BRRRR deal using hard money loan with Avalon Capital in Memphis. The ARV on this deal and with purchase and rehab. His ARV was $170K and he closed with only 7K. Just imagine how many deals you can buy with all that equity you have. If you need any help with this strategy, reach out. I help my clients do successful BRRRR deals all the time. I also buy myself. Goodluck!

Also, This refinance strategy on those properties is a 10 year interest only DSCR with a 30 year principal afterwards keeping his payment low for a few years so he can refi at a better rate and with more equity and keep more cashflow. He will not benefit from early equity by paying principal in his payment but will benefit from the cashflow. He also will refi again to a better DSCR loan when the rates are better. Solid strategy.

Aggressive strategy, Jordan! I like it!!! :)

I think I'd just pull the money out from only one of the two rentals that I already have, which are both cash-flowing (tenants are in place for both). I'm going to take the weekend to digest all this wonderful info from you and the other posters here, and I'll post again on Monday. Have a great weekend!

Good stuff man! Glad I can help! Goodluck to you!

Jordan, here is question for you (or for anyone posting in this thread!):

My main goal is to create more cash flow, so if you were in my shoes, would you try for the 3rd deal using a cash out re-fi on either of my two current rentals, if that that 3rd deal's numbers look like this? 

3rd property - All-in cost: $105K, ARV: $125K, rental amount: $1500/month (tenant already in place). I would be able to pull about $93k out of one of my current rentals by doing a cash out re-fi, and then I'd use that towards the purchase of this 3rd rental that would gross $1500/month.

I guess my main question is: is this a good deal if I buy it at $105K if it rents for $1500/month? I think the numbers are solid if I can get that cash out re-fi for one of my two current properties, but I'd like to hear yours and others' thoughts.

I would love to chat about your strategy. Give me a call anytime!

[Phil Petite]

Quote from @Jordan Ray:

Quote from @Phil Petite:

Quote from @Jordan Ray:

Quote from @Phil Petite:

Quote from @Jordan Ray:

Quote from @Phil Petite:

Hello Everyone!

I have two rentals in Memphis. Both are 3BRs, and they both have Section 8 tenants in place. One home is being rented for $1100/month and the other is getting $1250/month. Both homes were purchased in cash, so I do not have any debt on either property.

I'd love to do a cash-out refi on either home in order to buy another rental, but I am not sure if I'm missing something with the BRRRR method and would appreciate some guidance.

Current Rentals' ARV: $125k for both (slightly conservative # here)

Purchase Price for 3rd/new rental: $100K

Rehab Needed: $2.5k (tenant currently in place, just needs punch list items taken care of)

Gross Rental Income: $1500/month

I guess what I'm having difficulty with is how much I'll be able to receive back from the re-fi that I can use towards the purchase of this 3rd property. I calculate that 75% of the ARV on a home worth $125k is around $93k, but this is where I get a bit lost in the process.

Any advice/guidance would be amazing!! Thank you in advance!!!

Here is what I would do. First do cash-out refinances on both properties. Make sure that before you do that, each property will cash-flow. Assuming they still cashflow and you proceed to do a cash out refi. Then take that money and use it on a 100% purchase and rehab on a BRRRR property where all your numbers make sense. (ARV x 70% - rehab = contract price/offer) I just had a buyer client lock up a BRRRR deal using hard money loan with Avalon Capital in Memphis. The ARV on this deal and with purchase and rehab. His ARV was $170K and he closed with only 7K. Just imagine how many deals you can buy with all that equity you have. If you need any help with this strategy, reach out. I help my clients do successful BRRRR deals all the time. I also buy myself. Goodluck!

Also, This refinance strategy on those properties is a 10 year interest only DSCR with a 30 year principal afterwards keeping his payment low for a few years so he can refi at a better rate and with more equity and keep more cashflow. He will not benefit from early equity by paying principal in his payment but will benefit from the cashflow. He also will refi again to a better DSCR loan when the rates are better. Solid strategy.

Aggressive strategy, Jordan! I like it!!! :)

I think I'd just pull the money out from only one of the two rentals that I already have, which are both cash-flowing (tenants are in place for both). I'm going to take the weekend to digest all this wonderful info from you and the other posters here, and I'll post again on Monday. Have a great weekend!

Good stuff man! Glad I can help! Goodluck to you!

Jordan, here is question for you (or for anyone posting in this thread!):

My main goal is to create more cash flow, so if you were in my shoes, would you try for the 3rd deal using a cash out re-fi on either of my two current rentals, if that that 3rd deal's numbers look like this? 

3rd property - All-in cost: $105K, ARV: $125K, rental amount: $1500/month (tenant already in place). I would be able to pull about $93k out of one of my current rentals by doing a cash out re-fi, and then I'd use that towards the purchase of this 3rd rental that would gross $1500/month.

I guess my main question is: is this a good deal if I buy it at $105K if it rents for $1500/month? I think the numbers are solid if I can get that cash out re-fi for one of my two current properties, but I'd like to hear yours and others' thoughts.

I would love to chat about your strategy. Give me a call anytime!

 Thanks so much, Jordan! I'll give you a call tomorrow!

[Jordan Ray]

Quote from @Phil Petite:

Quote from @Jordan Ray:

Quote from @Phil Petite:

Quote from @Jordan Ray:

Quote from @Phil Petite:

Quote from @Jordan Ray:

Quote from @Phil Petite:

Hello Everyone!

I have two rentals in Memphis. Both are 3BRs, and they both have Section 8 tenants in place. One home is being rented for $1100/month and the other is getting $1250/month. Both homes were purchased in cash, so I do not have any debt on either property.

I'd love to do a cash-out refi on either home in order to buy another rental, but I am not sure if I'm missing something with the BRRRR method and would appreciate some guidance.

Current Rentals' ARV: $125k for both (slightly conservative # here)

Purchase Price for 3rd/new rental: $100K

Rehab Needed: $2.5k (tenant currently in place, just needs punch list items taken care of)

Gross Rental Income: $1500/month

I guess what I'm having difficulty with is how much I'll be able to receive back from the re-fi that I can use towards the purchase of this 3rd property. I calculate that 75% of the ARV on a home worth $125k is around $93k, but this is where I get a bit lost in the process.

Any advice/guidance would be amazing!! Thank you in advance!!!

Here is what I would do. First do cash-out refinances on both properties. Make sure that before you do that, each property will cash-flow. Assuming they still cashflow and you proceed to do a cash out refi. Then take that money and use it on a 100% purchase and rehab on a BRRRR property where all your numbers make sense. (ARV x 70% - rehab = contract price/offer) I just had a buyer client lock up a BRRRR deal using hard money loan with Avalon Capital in Memphis. The ARV on this deal and with purchase and rehab. His ARV was $170K and he closed with only 7K. Just imagine how many deals you can buy with all that equity you have. If you need any help with this strategy, reach out. I help my clients do successful BRRRR deals all the time. I also buy myself. Goodluck!

Also, This refinance strategy on those properties is a 10 year interest only DSCR with a 30 year principal afterwards keeping his payment low for a few years so he can refi at a better rate and with more equity and keep more cashflow. He will not benefit from early equity by paying principal in his payment but will benefit from the cashflow. He also will refi again to a better DSCR loan when the rates are better. Solid strategy.

Aggressive strategy, Jordan! I like it!!! :)

I think I'd just pull the money out from only one of the two rentals that I already have, which are both cash-flowing (tenants are in place for both). I'm going to take the weekend to digest all this wonderful info from you and the other posters here, and I'll post again on Monday. Have a great weekend!

Good stuff man! Glad I can help! Goodluck to you!

Jordan, here is question for you (or for anyone posting in this thread!):

My main goal is to create more cash flow, so if you were in my shoes, would you try for the 3rd deal using a cash out re-fi on either of my two current rentals, if that that 3rd deal's numbers look like this? 

3rd property - All-in cost: $105K, ARV: $125K, rental amount: $1500/month (tenant already in place). I would be able to pull about $93k out of one of my current rentals by doing a cash out re-fi, and then I'd use that towards the purchase of this 3rd rental that would gross $1500/month.

I guess my main question is: is this a good deal if I buy it at $105K if it rents for $1500/month? I think the numbers are solid if I can get that cash out re-fi for one of my two current properties, but I'd like to hear yours and others' thoughts.

I would love to chat about your strategy. Give me a call anytime!

 Thanks so much, Jordan! I'll give you a call tomorrow!

Looking forward to it! If I don't answer please send me a text and I will get back to you ASAP.

[Jake Baker]

@Phil Petite

You will most likely want to cash out refinance into a DCSR loan. @Nate Herndon seems like a great rate.

[Phil Petite]

Quote from @Jake Baker:

@Phil Petite

You will most likely want to cash out refinance into a DCSR loan. @Nate Herndon seems like a great rate.

 Thank you for the feedback, Jake! Appreciate it! :)