1st brrrr is almost finished but I have thoughts and questions

San Antonio, Texas
BRRRR - Buy, Rehab, Rent, Refinance, Repeat
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1st brrrr is almost finished but I have thoughts and questions

Chris Igard
San Antonio, TX · Member since 2017 · 60 posts · 13 votes

I'm finishing up my first BRRRR, bought the home at $115k, put $8k in out of pocket sweat equity. Have a renter in place at $1800 a month. House appraise for $245k. I'm should be finishing the refi the week after next.

Two part question

1. Do you all like to leave more money in the deal? We have other homes and I generally like to average around $500 or more per house after everything is paid off. As is we’re pretty close. What would we even do with the additional money we removed?

2. Moving onto our next possible brrrr, couple of things I did not like about our first one. Double closings with twice the fees, is there a way around that? Seems redundant to pay for a title search twice when the property hasn’t changed possession. I’m wondering if it would be smarter to put 10-20 percent down with a dscr loan versus paying cash and converting it into a dscr loan (double closing) or am I just overthinking it.

Thanks everyone.

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Kenneth GarrettPro Member
Investor · Florida Panhandle/Illinois · Member since 2016 · 4k+ posts · 3k+ votes
6mo

@Chris Igard

I've completed over 25 BRRRR's, the goal is to refinance so you can pull your money back out. The rehab goal is to force equity whereas you don't have any money stuck in. Looks like you can pull your money out and then some and still have pretty good cash flow.

If your goal is to cash flow $500 then it's just a math equation. I get the double closing costs, but it's small potatoes based on the rest. Based on other cost you might only cash flow $400 depending on whether you refinance at 75%, 80% or less. You are working with a good spread. Maintenance, CapEx should be low since it was just remodeled. Unless property taxes are high, at 75% LTV you are definitely at a nice cash flow number, but it most likely is less than $500. Still no money stuck in. I would consider this a very good deal.

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  • Matthew Bernal
    Investor · Austin, TX · Member since 2021 · 497 posts · 127 votes
    6mo

    Great first BRRRR that equity spread is exactly what the strategy is supposed to produce.

    On pulling equity out redeploy it into the next deal. Money sitting in a property earns one return. Money in two properties compounds faster. Your $500/month floor is the right discipline.

    DSCR at acquisition eliminates the second closing entirely. One loan, one title search, one closing cost stack. It only makes sense to go cash first when the property is too distressed for a DSCR lender to approve at purchase completely gutted, no mechanicals, uninhabitable.

    For light to moderate rehab, DSCR purchase at 20-25% down beats cash plus refi almost every time on total cost.

    I work with BRRRR investors on DSCR purchase and refi programs. Happy to show you the cost comparison on your next deal.

    Lets connect!

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  • Stacy RaskinBusiness Member
    Lender · Member since 2022 · 1k+ posts · 522 votes
    6mo

    There are fix and flip loan programs that will lend up to 90% of the purchase price and a 100% of the rehab done on draws. Fix and flip loan programs are good for properties that are not habitable. If you want to cut out the fix and flip loan part or you don't want to buy with cash and then convert to a DSCR loan, you can buy a property that looks older but is functional. It really depends on what kind of real estate deal an investor is looking at. There are DSCR loan programs with 20% down depending on the credit score and the property location.

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  • Kenneth GarrettPro Member
    Investor · Florida Panhandle/Illinois · Member since 2016 · 4k+ posts · 3k+ votes
    6mo

    @Chris Igard

    I've completed over 25 BRRRR's, the goal is to refinance so you can pull your money back out. The rehab goal is to force equity whereas you don't have any money stuck in. Looks like you can pull your money out and then some and still have pretty good cash flow.

    If your goal is to cash flow $500 then it's just a math equation. I get the double closing costs, but it's small potatoes based on the rest. Based on other cost you might only cash flow $400 depending on whether you refinance at 75%, 80% or less. You are working with a good spread. Maintenance, CapEx should be low since it was just remodeled. Unless property taxes are high, at 75% LTV you are definitely at a nice cash flow number, but it most likely is less than $500. Still no money stuck in. I would consider this a very good deal.

    2Reply
  • Shiloh LundahlPro Member
    Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
    6mo

    @Chris Igard the next decision depends on your goals. Do you want to cash flow $500 a month per property or do you want to get some cash back to continue to grow even if that means getting less cash flow right now?

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  • James JonesPro Member
    Investor · Collierville, TN 38017 · Member since 2017 · 926 posts · 637 votes
    6mo

    Solid first BRRRR Chris, those numbers look pretty clean especially with only $8k out of pocket.

    On question 1, personally I don't stress too much about pulling every dollar out. If you're already cashflowing $500/month and the refi covers most of what you put in, that's a win. The extra equity sitting in the deal isn't dead money, it's a buffer if the market shifts or you need a HELOC later. That said if you're pulling cash out, most people just roll it straight into the next deal.

    On question 2, yeah the double closing fees are annoying but it kind of depends on how you're sourcing deals. If you're buying off MLS with traditional financing from the start, you skip that whole issue. The DSCR from the jump idea actually makes sense if the numbers work at acquisition, you're right that paying cash then converting is just paying fees twice. Only reason to do cash first is if you need speed to win the deal or the seller won't deal with financing contingencies. If neither of those apply, just go DSCR straight in and skip the headache.

    Congrats on finishing the first one though, the next one always goes smoother.

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  • Jay TolugantiPro Member
    Investor · Clearwater, FL · Member since 2025 · 227 posts · 80 votes
    6mo

    I agree with James. Congrats on a great deal you got there. Just make sure you are in strong rental market. Personally, I would pull as much cash as I could because TX is a non judicial state and you dont want to miss any mortgage payments. I personally would prepay couple of mortgage payments to cushion the lender for lean months. 

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  • Vijay FriedmanBusiness Member
    Miami, FL · Member since 2026 · 766 posts · 124 votes
    5mo
    Quote from @Chris Igard:

    I'm finishing up my first BRRRR, bought the home at $115k, put $8k in out of pocket sweat equity. Have a renter in place at $1800 a month. House appraise for $245k. I'm should be finishing the refi the week after next.

    Two part question

    1. Do you all like to leave more money in the deal? We have other homes and I generally like to average around $500 or more per house after everything is paid off. As is we’re pretty close. What would we even do with the additional money we removed?

    2. Moving onto our next possible brrrr, couple of things I did not like about our first one. Double closings with twice the fees, is there a way around that? Seems redundant to pay for a title search twice when the property hasn’t changed possession. I’m wondering if it would be smarter to put 10-20 percent down with a dscr loan versus paying cash and converting it into a dscr loan (double closing) or am I just overthinking it.

    Thanks everyone.

    @Chris Igard
    Congrats on getting your first BRRRR to the finish line. With those numbers, I'd focus less on pulling every dollar out and more on maintaining flexibility for the next acquisition. A lot of investors find the optimal leverage point isn't necessarily the maximum leverage point, especially when scaling into multiple deals. Feel free to click Contact Us, check out our website, or give us a call if you'd like to discuss the scenario further.

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  • Alyssa MarquezBusiness Member
    Real Estate Agent · San Antonio TX / Fort Lauderdale, FL · Member since 2023 · 120 posts · 29 votes
    4w

    That's an impressive first BRRRR, especially with that appraisal! Personally, I wouldn't use the additional equity just because it's there. If you're close to your target ~$500/month cash flow, I would look to see how much extra cash you can pull out against how much that increased payment impacts your cash flow. If you don't have another deal or objective for the funds, sometimes it's OK to leave equity in a property.

    On the second one I would for sure compare the total cost of buying cash & refinancing vs. just buying & financing in the first place. Maybe DSCR makes that easier, but the rate, points, seasoning, rehab cost & funding, and refi terms all play a factor. I'd want your lender to run both for you to see before I made a decision. Could be worth a few more dollars now if the BRRRR allows you to redeploy much more total dollars.

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  • Erik EstradaBusiness Member
    Lender · Member since 2022 · 6k+ posts · 1k+ votes
    4d

    Hey Chris,

    I agree, double closing costs seem redundant. I would suggest working with a lender that does not require title commitment fees on refis (they are starting to roll out in select states now) & partnering up with a title company that can give you a package deal at a reduced cost. Sounds like your ARV is high enough to cover the purchase and rehab costs, so putting more cash in the deal may not make sense unless you are really betting on the higher cash flow.

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  • Mike Klarman
    Specialist · NJ · Member since 2022 · 1k+ posts · 661 votes
    1d

    Well, you're scenario isn't the norm for sure. 115k purchase that needs some paint and floors? 8k doesn't give you much and you nearly doubled the value of the house. Is there a bridge loan on the home? Did a lender fund you on the 115 purchase?

    Whoever you bought this from essentially gave this house to you. 115k + 8k/245k = That's a 50% project cost. Slam dunk deal and you have the 1% rule on the rent. You may never do this well ever again.

    Me, I'd take a 60% DSCR loan. Take 147k out. The PITI will be around that 1250 - 1400 range. Now you have your cash flow and your cash back.

    If you can duplicate the above, then it's a no brainer what to do with the cash - same exact thing.

    I just wouldn't get used to 50% project costs. Those are raaaaaarrrreeeee....

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