All Forum Posts by: Jake Baker

@Zachary Engen

Most lenders will allow a cash-out refinance of up to 75% of the property's appraised after-repair value (ARV), not the purchase price or costs. Using your example:

ARV = $250K
75% of ARV = $187.5K
So, theoretically, you could refinance up to $187.5K, which would cover your $150K (purchase + reno costs) and leave $37.5K in equity.

@Kris Lou

I recommend finding local meetups to attend. https://www.biggerpockets.com/forums/521
I have found all of my best connections at local meetups.

@Raj Vardhan

I agree with @Evan Polaski regarding the 6-Month Seasoning Rule: Most traditional lenders require a 6-month holding period before you can do a cash-out refinance. This is standard practice, but there are exceptions. Some portfolio or private lenders may waive this rule, so it’s worth exploring.

While waiting for the 6 months, finalize renovations, stabilize the property with tenants, and ensure all paperwork (leases, receipts) is organized.

@Jewell Arceneaux

How to drive ARV (my opinion)

Improvements that drive the ARV the most: Roof, New Kitchen & Bathrooms, Flooring, Paint

Improvements that DON'T drive the ARV as much: Windows, Landscaping, Driveway, Rough Plumbing & Electrical

@Maria Jeanette

Tax Advantages: Income and gains grow tax-deferred (or tax-free if using a Roth SDIRA).

All Costs Through the IRA: Expenses (repairs, taxes, etc.) must be paid from the IRA, so ensure it's well-funded.

You might also want to consult a CPA or attorney experienced with SDIRAs to ensure compliance with IRS rules and maximize benefits.

Best of luck!

@Levi Perl

Leverage vs. Liquidity: If this is your first or second property, prioritizing liquidity (by cashing out now) might allow you to seize unexpected opportunities, especially if you’re actively prospecting deals.

Since you don’t have a deal lined up yet, you might explore options to minimize the gap, like prequalifying potential deals or using short-term financing strategies to bridge the 4 months.

Good luck growing your portfolio!

@Ximei Yue

Pros: If executed well, BRRRR can help you scale faster. With $50K—$100K, you could fund a rehab and refinance to free up most of your equity for the next deal.

Cons: BRRRR often requires more hands-on involvement, especially managing contractors and timelines, which could be challenging with your demanding job and family obligations. With a trusted team, you might avoid delays or unexpected costs.

Advice: If you lean toward BRRRR, build a solid local network. Connect with contractors, property managers, and agents in your target market. A lower-cost market with manageable rehab scopes (e.g., cosmetic fixes rather than full gut rehabs) might be a safer entry point.

@Dennis Knapp

J Scotts book on estimating rehab costs is a great start. https://store.biggerpockets.com/products/the-book-on-estimat...

Here is a "general" rule of thumb for my market in Jacksonville, FL.
Light Cosmetic ($40 x Sq. Ft)
Medium Cosmetic ($50 Sq. Ft)
Heavy Cosmetic ($60 x Sq. Ft)
Studs Down ($85 x Sq. Ft)
Luxury ($175 x Sq. Ft)

For ARV, it is best to have an experienced real estate agent find comps for you to determine a safe number to work off of.

You are on the right track. ARV and Rehab costs are where BRRRR investors tend to make mistakes the most.

@Andrew Syrios I looked at my last five flips to calculate the rehab cost overrun; the average was 15%. One project went sideways, two went as planned, and two were slightly over budget. I concluded that 20% was a good number going forward. 

Great article by the way.

@Christian Hwang

For contractors, Yelp is okay, but referrals from other flippers in your target market tend to yield the best results. Also, ask your agent for recommendations—they often have relationships with dependable contractors.

Look for areas with a mix of affordability and growth potential. Tools like PropStream, Redfin, or Zillow's market data can help you identify neighborhoods with high demand and favorable price-to-ARV ratios. Population growth, job diversity, and low DOM (days on market) are significant indicators.