2nd Mortgage Payment doesnt work in the numbers

[Wayne Yahnke]

Good morning BP!

I’ve been crunching numbers on multiple buy and hold rentals as well as brrrr investments in my area and I continue to have trouble getting deals to cash flow with the 2nd mortgage Loan Payment (down payment and rehab budget) in the equation!

I’m using the BP 4 square method for these evaluations!

This is my 2nd rental property! The 1st one my wife purchased before we were together so it's a cash flowing property with an FHA! There is also leverage (equity) in this property should we need it.

I am in California so property values are on the high side. I can get into new properties that will cash flow with out the loan repayment in the equation.

Questions:

What do you guys do?

Do you calculate your repayment on your heloc or 2nd into your investment property equation?

Is it because of property values being high in CA?

Recommendations?

I’ve been reading, listening to the pod casts and watching the market for a while now and we are ready! We have made offers none have come through but these offers only cash flowed without the repayment in the equation!

Thanks in advance!

[Wayne Brooks]

In most areas, particularly higher price to rent ratio areas like Cali, properties will Never cash flow with 100% financing.