Refinance loan amount strategy help. how much after BRRR?

2 Replies

So I have a BRRR house that I purchase with cash, renovated and placed tenants. The seasoning period has passed and I am in process to begin cash out refinance. All in for 195k. My two options are to cash out refi for 136.5k ($7115 cashflow) or 160k ($5600 cashflow). I self manage so I dont have any PM fees that would reduce the cashflow further. I would ideally like to have more money for further investment, but dont know if I am unnecessarily hurting cashflow in favor of just hoarding cash for future rental acquisitions. The cashflow is nice but the cash for other investment also is alluring. Does anyone see these differently or have a different perspective. Just not sure of how others evaluate their BRRR cash out and how they might bring perspective. I'm not near retirement for another 20 years but early retirement using rental cashflow might be nice:)

@Jeff Bridges as long a there is healthy cash flow I would take the cash out now every time. This is due to the time value of money which is a concept many newer investors don't think much about. If you can grab an additional 24k in cash, that is equal to almost four years of cash flow at the current numbers you provided. That is significant if you think about it. Who is to say you will still have the same expenses in four years? 

Syndications look at this as part of the internal rate of return. The quicker you get your money back, the better your returns are is the simplistic way to look at it. In addition, if you get that money back, you get to play again! This further increases your overall cash flow, while decreasing cash flow on your current property. 

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