Updated over 3 years ago on . Most recent reply
Best use of cash out refinance funds- how much needed to start
We are in process of closing on a cash out refinance. We will have $235,000 to work with when said and done. Our current home needs a lot of remodeling. We are hoping to accomplish that as well as get into our first BRRRR. We are struggling with how much to allocate to each part of that plan. Hoping for some guidance on how much is needed to start with our first BRRRR so we make sure to set aside enough to accomplish that goal and not put too much into our remodel. I appreciate any input.
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@Jason Charter it's a great question but this is 100% a personal choice.
If this were me I would allocate $0 to my personal house and $235k to the next BRRRR(s). Since you want to remodel your home then you allocate as much as you like...
The amount needed for a BRRRR is entirely dependent on your market. Most BRRRRs are purchased for cash and then you fund 100% of the rehab costs in cash. So, can you find a property in your market for $100k, needing $20 worth of work that appraises for $160k+? If so, then you need $120k for the BRRRR.
You're in a fantastic position to start your real estate investing career. Most people never get started because they don't have any funds or they spend them on personal things (e.g. bigger house, newer car, new watch, etc...). Don't fall into that trap.