Dilemma regarding timing of brrr

[Axel Scaggs]

I recently purchased a property in cash and planned to use the brrr strategy. It needs about 45k in repairs. So far I've invested 20k. I have a large amount of cash in the bank for the repairs. However, I found a duplex deal that was too good to pass up, as it was priced about 100k+ under its true market value. I received conditional approval for a DSCR loan and got the duplex under contract. We are in the very early stages of the underwriting.

Now for the issue. I have enough cash in my bank account to cover the downpayment and closing costs etc. However, now I may need to put the cash property’s renovation on hold since my funds are now taken atm. I considered using my credit card to pay for the renovations and then the pay them off via the refinance. However, this would affect my credit by suddenly having 25k+ in usage on my cards, possibly affecting my loan for the duplex.

Is it better for me to just wait until the duplex closes to continue renovations on the other property? Or is there an alternative I’m not seeing? Closing on the duplex is the priority, as it was an incredible deal, so I just don’t want to jeopardize anything.

[Patrick Roberts]

I wouldnt draw on the credit cards. I see this quite a bit - draw on the credit cards for the rehab, then CC ulitization crushes your credit score, then you get horrible terms or declined for a refi because of credit. 

If youre wanting to run both projects simultaneously, go get property financing for the rehab now. If not, just wait until the first project is completed. Dont get into a situation where you no have no liquidity - when youre out of cash, youre out of business.