BRRRR after refinance leave minimal to no cash flow

[William S.]

I have been running numbers on potential SFH BRRRR properties. It seems best case scenarios have been that your total out of pocket cost in the end is little to no money for the exchange of time. However, after the refinance your cash flow is near $0. Basically in the end you spent no money, and after the refinance you cash flow nothing, but end up with a house without paying anything. I have been calculating my cash flow over the long term (30 years/length of mortgage), which means a higher CapEx budget due to the length of the hold. Does BRRRR only make sense if you hold short term (5-10 years) then sell and repeat the process? I am seeking long term cash flow/holds so I am not sure if it makes sense. Am I missing something?

[JD Martin]

OK, I will give you a quick one off the top of my head from our portfolio from a couple of years ago:

Purchase & rehab costs: $48k

ARV: $65k

BRRR cash out = $48.5

PITI: $280

Vac/Cap/Maint/Mgmt: $250

Rent: $800

Cash flow after BRRR: $270

Moral of the story: if there's only cash flow without a mortgage it's probably not a very profitable investment.