Am I ready to refinance and buy my next rental?

[Jacob Bremer]

Hello all,

Two years ago I purchased a SFH for 210K. Renovated for 35K. Have it rented out for 1900/mo since then. My monthly payment is $1550/mo. We have about 5K in reserves. My current interest rate is 7.4.

There is another home that would be nearly an identical rinse and repeat in the neighborhood. I would purchase for around 220k. From my lender estimates, they would give me roughly 6.5 on the refi but taking another 70K for DP and reno for the 2nd home would put my monthly at around 1800/mo. 

If these numbers are accurate, would pursuing it be too aggressive given the small delta between the new potential monthly payment and current rent? 

[Ricardo R.]

Hey Jacob,

You're clearly thinking like a BRRRR investor — rinse and repeat — but you're right to pause and look at that cash flow margin before pulling the trigger. Let's break it down:

1. The numbers are tight.
If you’re pulling $1,900 in rent on a new $1,800/month payment, that’s razor-thin — especially with today’s taxes, insurance, and maintenance costs climbing. You’d basically be betting that appreciation and rent growth make up for low or break-even cash flow early on. That can work, but it’s not ideal if your reserves are thin.

2. Your reserves are the real limiter here.
$5K isn’t much cushion — one furnace, AC, or vacancy can wipe that out fast. Before you take on another property, I’d want to see at least 3–6 months of total expenses per property saved. You’ll sleep way better, and it keeps you from being forced into bad short-term decisions.

3. Interest rates and timing.
Yes, 6.5% is better than your current 7.4%, but not by enough to transform your numbers. If you can refinance the first property and pull cash while dropping your rate and payment, that’s worth exploring. But if the new deal only breaks even after debt service, I’d slow down.

4. BRRRR still works — but only when the “R” actually returns your capital.
If the refinance on the first house frees up real equity and still cash flows after the new rate, great. But if you’re just layering on another high-payment loan to chase a slim margin, you’re growing exposure faster than your safety net.

My Advice: the deal itself isn’t terrible, but your reserves are the choke point. Shore those up first — even $10–15K more gives you breathing room. Once you’ve got that buffer, rinse and repeat will feel a lot less risky; Jacob I really hope this helps you, I sent you DM on BP, its one of the reasons I do this, I hope you can assist.