Would you Cash flow or Cash out?

1 Reply

Looking for your $.02

I am in search of my second deal, a BRRRR. I found a property I like. I am having an issue with meeting the numbers I need. I want my cash back because I really only have enough for 1 deal at a time. But i am having issues cash flowing enough after the REFI if I pull out all of my cash. There is sufficient equity in the deal left over. Even when my cash flow equals $0.

I outlined the deal if that helps.

A duplex. Purchase price is 70,000. Comps are conservatively 150,000. Max Refi would be 112,000 at 5.5 %. Total rent 1900 a month. With all things considered a monthly cash flow of  $43/mo. This would increase my buying power by 30%. Allowing me to buy larger or better deals.

If I refi just enough to pull out all of my cash I would cash flow $150/mo. Half of my cash flow goal.

If I leave all of my cash in $36,500 I would cash flow $380/mo. With a 12.3% CoC ROI.

My goal is to have 4k/mo. passive income from rentals by 2026. 

Would you take having no cash flow for the ability to acquire future purchases?

Would you  leave your cash in for the higher cash flow and find a line of credit?

How would your choice differ now that lending is hard to get vs. last year when lending was easier? 

If I were in your position, I would refinance enough to pull out all of my cash.  Then, make sure you save at least 6 months worth of expenses and keep that cash readily available at all times.  You don't want to get caught without cash to cover your expenses and the higher cash flow per month won't help you if you don't have sufficient reserves.  Then, I would take the money you have and go find another deal and do it again.  I think you will make it to your goal by doing just what you're doing and adding more properties.  Good luck!