Capital-raising decision for BRRRR

[Darryl Schott]

Howdy. I am a new member to BP, originally from San Antonio, TX currently living in New Braunfels, TX, and just starting out in REI. I've read to the guide to BRRRR from David Greene and I'm anxious to start assembling a team. I have a question that's been gnawing at me:

1.  My primary residence will be paid off in March 2023 since I've been throwing all extra income and non-emergency savings at the house.  We will be 100% debt free.  Because of this, I have no liquid capital to start BRRRR.  I can either save ~75k in the next calendar year (presumably 50k for down payment, 25k for rehab) and wait a year before beginning, or, is it possible (and wise) to borrow against my primary residence to get started now and keep the momentum going.  I'm concerned about losing momentum of trying a 90 day challenge to buy my first property.  What are your thoughts on managing the finances given this situation?

I have no network yet in the San Antonio/Austin metro (if we stay local) or the Indianapolis, IN metro (if we go out of state), but my wife and I are very interested in building a significant real estate portfolio for the next 20+ years.  I'm already on the path with self-education, but I'm eager to connect with lenders, property managers, contractors, and agents who have a heart of a teacher.  If that's you, let's talk!  I want to add value to your businesses by learning and DOING my part as well as I possibly can as the portfolio grows.



  

[Robin Simon]

Quote from @Darryl Schott:

Howdy. I am a new member to BP, originally from San Antonio, TX currently living in New Braunfels, TX, and just starting out in REI. I've read to the guide to BRRRR from David Greene and I'm anxious to start assembling a team. I have a question that's been gnawing at me:

1.  My primary residence will be paid off in March 2023 since I've been throwing all extra income and non-emergency savings at the house.  We will be 100% debt free.  Because of this, I have no liquid capital to start BRRRR.  I can either save ~75k in the next calendar year (presumably 50k for down payment, 25k for rehab) and wait a year before beginning, or, is it possible (and wise) to borrow against my primary residence to get started now and keep the momentum going.  I'm concerned about losing momentum of trying a 90 day challenge to buy my first property.  What are your thoughts on managing the finances given this situation?

I have no network yet in the San Antonio/Austin metro (if we stay local) or the Indianapolis, IN metro (if we go out of state), but my wife and I are very interested in building a significant real estate portfolio for the next 20+ years.  I'm already on the path with self-education, but I'm eager to connect with lenders, property managers, contractors, and agents who have a heart of a teacher.  If that's you, let's talk!  I want to add value to your businesses by learning and DOING my part as well as I possibly can as the portfolio grows.



  

Welcome to BP - you've come to the right place. I think you have thought out your plan pretty well - but what is your current interest rate on your primary residence? If its significantly lower than current rates (anything under 5% basically), I would question why you are paying that off with all the extra income? If your plan is to get going on real estate investing as soon as possible, you'd probably be better off saving that money for down payment vs. taking out a HELOC or cash-out refinance on the primary at today's higher rates?

Regardless - your point of networking is also strong, would love to connect, we (Easy Street Capital) are a BRRRR specialist lender in Austin and specialize in lending on BRRRR projects, and throw a lot of good meetups and events in the area. Would love to connect!