Stay The Course?

[David Graham]

During COVID, my brother and I acquired our first SFH, which we have lived in over the last 5 years. Since then, we have acquired an additional SFH and a duplex earlier this year. The SFH cash flows ~$950 / month (10.3% cash-on-cash return). We are planning to renovate the duplex and move into each side later this year (finally needing our own spaces), which will allow us to rent the other SFH at $800-$1,000 / month positive cash flow (~11% cash on cash return).

The duplex will eventually be refinanced into a residential loan and should cash flow ~$500 per door after renovations (again between 10%-11% cash on cash return). All three properties are in A/B class communities and have significant appreciation upside over the next 10-15 years.

When we refinanced the one SFH last year, we only pulled out about 80% of what we could have, leaving the overall LTV at 69%. We would like to scale faster, but prefer having strong cash flows at our properties. For those that BRRRR properties, are you taking out the maximum amount on the refinance to fund future deals or leaving some room for cash flow?

[Chris Seveney]

Quote from @David Graham:

During COVID, my brother and I acquired our first SFH, which we have lived in over the last 5 years. Since then, we have acquired an additional SFH and a duplex earlier this year. The SFH cash flows ~$950 / month (10.3% cash-on-cash return). We are planning to renovate the duplex and move into each side later this year (finally needing our own spaces), which will allow us to rent the other SFH at $800-$1,000 / month positive cash flow (~11% cash on cash return).

The duplex will eventually be refinanced into a residential loan and should cash flow ~$500 per door after renovations (again between 10%-11% cash on cash return). All three properties are in A/B class communities and have significant appreciation upside over the next 10-15 years.

When we refinanced the one SFH last year, we only pulled out about 80% of what we could have, leaving the overall LTV at 69%. We would like to scale faster, but prefer having strong cash flows at our properties. For those that BRRRR properties, are you taking out the maximum amount on the refinance to fund future deals or leaving some room for cash flow?

 I do not take out max amount because I like to sleep at night and if there is softening or vacant unit etc. the cost is much easier to absorb.