Would you take on negative cash flow on a BRRRR deal?

[Jason Shackleton]

Let's say you just completed a renovation project and the appraisal came back higher than you expected for once. You now have an opportunity to pull out a ton of equity with a cash out refi. Would you do this even if it meant the property would be put into a negative cash flow position?

I personally would only put the property into a neutral cash flow position. I don't like the idea of holding any negatively cash flowing properties. I am curious what other BRRRR investors would do in this scenario.

[Greg Downey]

I think that totally depends on whether or not you can arbitrage that money into another asset that can cashflow for both. I have some clients that do this in more expensive areas of the country since the cash-gains are simply larger in dollar amount (not necessarily by percentage) and do similar deals in more affordable areas (ie- the midwest). They can take the extra cash out (on a negative DSCR) but go buy 3,4,5 properties that cashflow very well.

I think it just depends on your ability to use that money to NET up cashflow OVERALL.