Cash out now (DSCR) or wait until next spring (conventional)?

Question

Not my first BRRRR, but have some concerns with the current state of local values, mixed with a few personal factors. Just looking for some differing opinions, while I fully understand there isn't a "right or wrong" answer here.

I wrapped up my latest renovation project a few months back, and now we have a great renter in place. Here are some rough numbers on the deal.

Purchase = $118k

Rehab = $65k

Rent = $2000/month

Mortgage = $900/month (conventional 7.8% rate)

ARV = $250k (very few recent sales/comps have me questioning this number more than my past deals)

My plan was to cash out with a DSCR loan in September, but with rates high and values low, I am not considering waiting until next spring to conventionally cash out, saving money up front and getting a lower rate. In addition, with market and appraisal uncertainty, I don't want to go 0/3: appraised value (lower cash out), interest rate (higher rate) and closing costs (paying more). The benefit is pulling my cash out quicker and putting it into another deal. Or, putting it towards a contingency fund for our family (below)...

We are expecting our first child in September, and as much as I'd love to have the extra cash on hand in case our primary residence or rentals have any emergency issues that need swiftly handled to alleviate stress while on new dad duty, I don't want to rush into the DSCR cash out and end up not using the funds before next spring anyway. In that case, waiting and going with a conventional cash out in Spring 2026 (with hopefully lower rates and/or higher appraised values) would be the best move.

The current cash flow on this property alone is fantastic, and I do also work a full-time W-2 job, but I am torn between expediting the cash out process or waiting a few more months to hope to improvements to all 3 of the aforementioned items.

Any advice, considerations or ideas to get my plan set would be much appreciated!

Robert Kohnfelder · Answer

Just a follow-up here: Decided to move pursue the DSCR cash-out refi and got the appraisal back at right around the initial expected ARV. Upon reviewing some recent sales, I pushed back and (for the first time in several attempts over the years) got the appraised value increased by about 5%. Moving forward with the cash-out process and looking for my next move -- after the new addition to the family!

Beauford Jefferies · Answer

Robert, I would see what rate I could get and how much cash out while keeping the LTV rate steady. Time value of money says that you get the money now invest or just put in a HYSA to draw interest for you until you decide your next move. I'm currently near the same predicament. I brought a MF for 65k rehab is expected to be complete in 2 weeks which my guest rough estimate will appraise for 300-320k. Once I lock in my move I'll provide an update!

Zachary Deal · Answer

Think this is great advice. With the market shifting to more of a buyers market it's nice to have cash on hand in case you want to purchase another rental

Andrew Zamboroski · Answer

Robert, you are not the only one with this dilemma. I look back and think about clients that thought rates were gonna drop soon when they were 5% for example , a couple of year ago now. Unfortunately we can never perfectly time the market, the best you can do is find something that you can live with. Rates being in the 6’s for many scenarios currently, could give you a nice boost. The other thing to consider is if your market will continue to soften, which could impact the value. I have also had clients wait to refinance and their market decreased, which inhibited their ability to accomplish a good BRRRR. Of course, both rates could drop and values could increase, but you only have the present circumstances.

Good luck!

Alex Hileman · Answer

Hey Robert, congrats on the baby!

Here's some good news for you: mortgage rates just dropped to their lowest point in nearly a year at 6.57%. I would look at rates and property values with a long terms lens, instead of trying to time them week by week. Right now, rates are relatively low, and Pittsburgh property values have appreciated 10% just in the past 2 years. The Pittsburgh real estate market has been historically stable in appreciation. It is very likely that mortgage rates and property values will continue trending up.

From my experience of working with appraisers, they usually use more recent comps and adjust. Property values, demand, and inventory tend to dip in the winter and peak in the summer.

If you hold or sell, you're coming out on top either way. Looks like you picked a good investment!

Alex Bekeza · Answer

It sounds like you have a pretty good grip of your options and it really just depends on the opportunity cost is in terms of whether cashing out now would allow you to put another BRRRR in motion but on the other hand I'd imagine your lady would prefer your undivided attention over the next few months! (haha speaking as BRRRR investor who has had to answer deal emails from the delivery room)

Doug Smith · Answer

The rates really aren't hight at all for DSCR's right now. They are in the mid-to-upper 6%s. They have been more favorable than Fannie/Freddie lately.

AJ Exner · Answer

Hey Robert,

Congrats on the news! Definitely makes things more interesting!

As for the refinance, you are probably seeing prices dip because of the current rate environment we find ourselves in. With higher rates, less people are buying which is keeping supply up. That, in turn, brings prices (comps and ARVs) down, supply-demand.

That being said, I don't think that time is going to make anything much better. **OPINION - NON EDUCATED ALERT** Rates might be a little better, but values might not be.

I think you might have to wait too long if you did that, and in my experience, money 'now' is better than money 'later'. Obviously it is your decision but if you are in a good debt vs. equity position, it might be worth dipping your toe in the water to try.

Good luck though, happy to connect and talk through it more if you would like.

Darryl Marshall · Answer

Congrats... What areas are you most active in... I'm from Pittsburgh as well... Great market as you can still get property at good prices compared to the rest of the country and still tremendous room for growth to the upside...

Alex Hileman · Answer

@Robert Kohnfelder congrats!! Great job negotiating your appraisal and showing them updated comps. Now you can take it easy with the new baby!

Cash out now (DSCR) or wait until next spring (conventional)?

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