BRRRR or Let it Flow?

[Eric Reed]

Hi BP Friends,

We just closed on our second property (a duplex) that we bought for under $60k! With current renters willing to sign a year-long extension, we have the place rented for $1,025/month. The property needs some love, and we're wondering if we should be doing renovation at the end of the year as a BRRRR update, or just let the cash flow roll in and not touch it until someone moves out?

Current PITI is about $600/month so our cash flow is about $425/month. Do we just let it stack up? Do we BRRRR?

Thanks!

Eric 

[Jake S.]

Hey Eric! Congrats! I'd leave the current tenants in there until the lease expires and then give it some love.

Make sure out of that cash flow that you are budgeting for Vacancy, CapEx, Repairs and Management (if you have a manager)

So if you budget aside

10% repairs/cap ex = $105/mo
5% vacancy               = $55/mo
10% management    = $105/mo

= $265 budgeted

$425- $265 = $160/mo cash flow. Which is still great for a low priced property!

How's the area?