Best Next Steps for Buying Second Investment Property

Member since 2025 · 2 posts · 1 vote

I currently own a property that has around $110,000 in equity. While I do not have a renter in this property yet, my plan is to have one by the end of the year (currently still renovating parts of the house). With the amount of equity that I have, I have been thinking a lot about investing in a second property. I've always had the dream of owning vacation rentals, however, I don't have that much capital and I worry about the "feast or famine" aspect of STR's.

I guess my main questions are: What's the best next investment for someone who is relatively new to real estate investing, is the BRRR method smart for me and should I do a cash out refi to help fund the next investment?

Thank you all for your help and advice. It is much appreciated!

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Denise SuppleeBusiness Member

Realtor · Willow Grove, PA · Member since 2017 · 991 posts · 646 votes

11mo

Hi @Josh Anderson nice to meet you here on BP! A cash-out refi could fund your next property, but only if your current home can cash flow once rented. For a newer investor, a long-term rental in a steady market might be the safest next move.
To maximize your money, consider house hacking or buying a small multifamily, you get rental income while living in one unit. If you’re set on STRs, start small: look for markets with year-round demand (near hospitals, colleges, or business hubs) to reduce seasonality risk.
BRRRR can work, but it's capital- and time-intensive. Focus on strong deals and learn the rehab process first before scaling.

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Jeff CopelandBusiness Member
Real Estate Broker · Tampa Bay/St Petersburg, FL · Member since 2015 · 1k+ posts · 2k+ votes
11mo
How are you arriving that the $110k number? Do you owe money on the property, or do you own it free and clear? This will determine your options, ranging from:
Currently free & clear on a property valued at $110k: Cash out refinance at 75% LTV gets you $82,500 in your cash out (ignoring closing costs and prepaids). At 7% interest on a 30 year fixed loan, your P&I payments would be around $550/mo (add taxes and insurance for the full PITI payment)
$1M in value with $890k in existing debt: In this scenario, although you indeed have $110k in equity, you're already at 89% LTV and don't have enough equity to do a cash out refinance.
Of course, you may fall somewhere inbetween, but the math is the same.
1. Current Value x 75%* = Cash out potential.
2. Then subtract your existing debt.
3. Then calculate your debt service according to your available financing terms*.
4. Compare this to your cash flow to see if it makes sense.
(*You may get different LTV with different types of financing. Figuring out your financing options is a crucial part of this process)
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Josh Anderson
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Member since 2025 · 2 posts · 1 vote
11mo
Thank you for the response Jeff. I should have been more clear on the details of my property. The property has been appraised at $270,000 and I currently owe $160,000 on the mortgage.
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- Jeff CopelandBusiness Member
  Real Estate Broker · Tampa Bay/St Petersburg, FL · Member since 2015 · 1k+ posts · 2k+ votes
  11mo
  Quote from @Josh Anderson:
  
  Thank you for the response Jeff. I should have been more clear on the details of my property. The property has been appraised at $270,000 and I currently owe $160,000 on the mortgage.
  
  So $270,000 x 75% = $202,500
  $202,500 - $160000 = $42,500 available to cash out.
  
  Note that your financing costs (points, fees, etc) will eat into this as well. So you have to figure out if the juice is worth the squeeze to access around $40k in capital. It will likely depend on what you do with the $40k. If you invest it in another $160k asset with 25% down, then repeat the process in a couple of years, it can be a solid way to end up with a larger portfolio.
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Joey BanasihanPro Member
Investor · Boise, ID · Member since 2019 · 234 posts · 188 votes
11mo
Hey @Josh Anderson - good questions, I think it just comes down to your long term goals. STRs has some really cool tax advantages (which will take some work) but it is a high rist and high reward strategy. If you are want to park you money and let it grow, and keep doing it over and over to build a nice portfolio, BRRRR is a great strategy. Regardless of what you do, the important part is you always need to plan for being able to cover the cost of the interest of the money borrowed via HELOC. MY wife and I the same thing you are doing, primary home, fix it up and move to the next one - thats how we got to four rentals doors, and investing and helping others invest in a high appreciating market like Boise has really helped us do this every 2-3 years. Anyways, happy to chat more, just DM me!
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Denise SuppleeBusiness Member
Realtor · Willow Grove, PA · Member since 2017 · 991 posts · 646 votes
11mo
Hi @Josh Anderson nice to meet you here on BP! A cash-out refi could fund your next property, but only if your current home can cash flow once rented. For a newer investor, a long-term rental in a steady market might be the safest next move.
To maximize your money, consider house hacking or buying a small multifamily, you get rental income while living in one unit. If you’re set on STRs, start small: look for markets with year-round demand (near hospitals, colleges, or business hubs) to reduce seasonality risk.
BRRRR can work, but it's capital- and time-intensive. Focus on strong deals and learn the rehab process first before scaling.
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Ken M.
Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
11mo
Quote from @Josh Anderson:

I currently own a property that has around $110,000 in equity. While I do not have a renter in this property yet, my plan is to have one by the end of the year (currently still renovating parts of the house). With the amount of equity that I have, I have been thinking a lot about investing in a second property. I've always had the dream of owning vacation rentals, however, I don't have that much capital and I worry about the "feast or famine" aspect of STR's.

I guess my main questions are: What's the best next investment for someone who is relatively new to real estate investing, is the BRRR method smart for me and should I do a cash out refi to help fund the next investment?

Thank you all for your help and advice. It is much appreciated!
Well, since banks are particular, I like to use creative financing like
https://www.biggerpockets.com/forums/311/topics/1265821-usin...
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Ashish AcharyaBusiness Member
CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
11mo
Hey @Josh Anderson! You've gotten some great responses so far, and you’re in a strong spot to start scaling. There are a few ways to think about your next move.

From a tax and strategy perspective, here’s how to look at it. If you do a cash-out refinance (like others have mentioned above), that money isn’t taxed since loan proceeds aren’t income. You can use it to buy your next property while keeping your first one for depreciation, mortgage interest, and expense write-offs. Just make sure the new payment still leaves you with healthy cash flow once it’s rented.
Like Joey mentioned, short-term rentals offer some attractive tax benefits if you're willing to put in the work, but you'll want to make sure it aligns with your current income (if you're looking to use the STR Loophole to offset) and that the numbers make sense for you. It can be higher risk, but hey, if it's your dream, it's worth running the numbers and looking into.

The BRRR method can be smart if you’re comfortable managing renovations and short-term financing. It lets you build equity faster and reuse the same capital, but be sure to account for repair costs and refinance timing so you don’t lose your tax-deductible interest window.

For this next property, I would also think about cost segregation and depreciation strategies. These can accelerate deductions, reduce taxable income, and help you reinvest those savings into more properties and maybe help fund that vacation rental. Combining cash flow with tax planning is a way to really scale.

If you want something steadier, start with a mid-term or long-term rental before diving into STRs. You’ll still get solid tax benefits and learn how to manage efficiently.

Best of luck as you expand, and happy to connect if you’d like to go over your numbers or next steps.

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