Might have messed up the BRRRR on my first property

[Jobee Vincent Buenaventura]

Hey All!

I know your time is valuable so I’ll cut to the chase. I’m investing locally in northern NJ so homes are very expensive, but it’s a market I’m most familiar with. In September I bought a 4bed 2bath multi-family for $390k, and I put 20% down (~$78k). Seller paid closing costs. It appraised for $420k while still under contract. Projected net profit comes to about $500/mo fully rented out.

I spent about $10,000 on relatively light renovations for the walls, floors, and windows (60% contracted, 40% sweat equity). I’m planning to have the second unit ready for tenants by spring. I inherited tenants on the first floor unit and they are great people.

My worry is that I actually won’t have enough equity in the property to recoup most of my capital back to buy the next one anytime soon. I believe I was way too excited thinking that I could be getting a 2-fam at a $30,000 discount. But in reality $390k is only about 93% of the appraised value of $420k (before my upgrades).

What do you guys think are my options at this point? Is refinancing still possible after 5 months? Thanks in advance.

[Brent Kiger]

@Jobee Vincent Buenaventura Congrats on the purchase. I'm in a different market than you are, but I know my bankers here will only go 75% LTV on a refi. Unless there is room to continue to upgrade the property and push that appraisal up even more, but obviously you want to be careful about putting more cash into it, without being relatively certain it will appraise accordingly. Obviously use your best judgment if you decide to rehab further, but to me, that sounds like the only real option if you want to pull more out, is just to try to make it appraise higher. Sounds like a pretty solid buy and hold long term deal though.