Need help with first brrrr

10 Replies

Hello again BiggerPockets, I have a Dilemma I would love to get some input on.

I purchased a condo in June of 2017.

All in with rehab, the cost was $75k (including furnishings).

It has been on Airbnb for nearly 2 years now.

After all expenses, (including management) the property nets around $3k/month (hands free) consistently.

It is a condo that has proven nearly impossible to (re)finance (due to mostly investor ownership in the community).

Now it has a market value of roughly $150k+. Even with the new valuation the property is still preforming at a 20% plus cap rate.

I would love buy 20+ caps (B class properties) all day, but the lack of leverage presents a problem when one is trying to scale.

I have however, been able to reinvest the cash flow directly into a couple small multi family deals.

On the other hand, In my market the extra $ down (from sale or refi) can absolutely get me a larger multi family deal (which is my desired trajectory).

so, the question is:

(A) Sell a 45+ %+ cap rate property (which truthfully makes me cringe), take the double up on investment and 1031 to a bigger deal.

(B) Keep property and scale accordingly via reinvesting cash flow + savings.

Or,

(C) Something I may be unaware of.

Any/all input would be greatly appreciated.

First of all, how can you not refinance because investors own the properties. If the prop is truly worth $150k you should be able to take out about $35 k in equity.

No I would not sell. You would net about $60k and you make that in income in less than 2 years. Why not save up the $60 k from your cash flow and refinance in 2 years and you will have $100k or so for a down payment and keep the $36k in cash flow each year.

Netting $3k/month is something I would do everything to hold onto, especially with a cap that high. I would definitely not sell that at all. If you're trying to refinance, maybe look at local banks and credit unions, as there no reason you shouldn't be able to refinance that. 

I would keep that cash flow and save it for future payments, but I would also look to pull equity out of the property every couple years via either a refi or a HELOC to expand your portfolio.

Originally posted by @Brian Medansky :

Netting $3k/month is something I would do everything to hold onto, especially with a cap that high. I would definitely not sell that at all. If you're trying to refinance, maybe look at local banks and credit unions, as there no reason you shouldn't be able to refinance that. 

I would keep that cash flow and save it for future payments, but I would also look to pull equity out of the property every couple years via either a refi or a HELOC to expand your portfolio.

I definitely agree with not wanting to ever sell this property. 


Do you know of a HELOC that can be done for investment property?

For some reason I thought of home equity lines of credit as being an owner occupant type of product.

Thank you for your input, any/all help is greatly appreciated.

Thank you again 

@Sharee Paulino generally speaking a HELOC would be for an owner-occupied property, but if you talk to enough lenders, I'm sure you could find someone (again, I'd check local community banks or credit unions) who can find a way for you to pull some equity out either via refinance or with a HELOC.