How much is too much to pull out BRRRR

Question

Recently bought a duplex for 40,500. I put in about 8,000 and the appraisal came back at 80,000. Do i maximize the amount I can pull out of this or would I take less to maximize monthly cashflow? I.E. is the money I would be saving from the mortgage payment by taking less of a loan worth it? Interested in your opinions

Ryan Casady · Answer

It depends on your goals. Personally - I would pull out the maximum as long as cashflow stays positive. This way I have capital to use for the next property, because my goal is to acquire as many properties as possible over the next few years.

Jennifer Donley · Answer

Good work!   As long as the cash flow stays strong, I'm willing to pull out 70 to 75% in these price ranges.  But I echo what the others have said - depends on your goals and situation.

Wesley Sherow · Answer

@Kyle Fitzpatrick I think a lot of good points are here. I wanted to add, consider the time value of money when deciding. If you worked x hours to get a $40,000 payout, what’s your hourly rate?

Similarly how much more can you get from it? How much work will it take? Would it be better to do the next one sooner?

These questions will give you your answer.

Tracey Corea · Answer

Consider the closing costs and pull a reasonable amount to justify those. BUT, also consider your risk tolerance and personal financial situation. If you have plenty of emergency cash, other assets and/or a high paying job, it’s one thing. If you need the rents paid in order to pay your mortgage, be cautious. Make sure your margins are large enough that rent will cover ALL expenses on the property, comfortably, no matter what the property value is. Have reserves in case you get a nightmare tenant or a large unexpected expense comes up. Every persons situation is unique. Best wishes,Tracey Corea

How much is too much to pull out BRRRR

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