Whether to skip the cash-out refinance on a BRRRR and just clear the bridge instead
Take a four unit BRRRR bought at 265k with a hard money bridge, 82k of rehab across all four units, all in near 360k, with a bridge maturing in seven weeks. Stabilized rents at 1,150 a unit put gross at 4,600, and the property appraises at 455k on the income approach once fully leased. Three paths typically get weighed at this stage. A cash-out refi at 70 percent of 455k, roughly 318k, pays off the bridge and returns around 40k of a 95k cash investment, leaving 55k trapped in the deal, with debt service, taxes, insurance, and a real 8 percent management line often landing near 350 dollars a month across four doors, thin for an older building. A rate and term refi that only clears the bridge, roughly 250k, returns nothing but leaves comfortable coverage and preserves the option to pull cash later if rates move. Or a sale, netting perhaps 70k after costs for redeployment elsewhere. What's worth noticing is that the textbook BRRRR move, the full cash-out, often produces the thinnest monthly number of the three options. Trapped equity is real equity, but it doesn't cover a compressor failure in August, and treating rehab budgets as soft, since unexpected items like a sewer line repair rarely make it into the original scope, is good practice on every deal. Choosing less cash out for stronger coverage is discipline, not fear, as long as the decision is made deliberately rather than by default.
