To BRRR to not to BRRR..That is the question !

[Michael Brindley]

Hi Everyone, I have 30yrs as Senior Creative designing interiors/retail/commercial and hospitality spaces all over the world and made a lot of clients, serious money and I don't know why it's taken so long to wake up and smell the coffee, but here I am, tired of selling my skills to benefit others...So, one stumbling block for me right now on the BRRR method, the numbers don't seem to add up in my head on the refinance part and I think I'm being super stupid here.

If we take the typical example and do the 150K + 30K purchase/rehab and it's worth 220K when it comes to the repeat refinance, you get say 160K; you/investor just lost 20K !!!! Yes, it rents out, and you flow say $295 month and property over time increases in value, but it would take 5yrs plus to get back the 20K you've just lost ???? 

I think I'm not getting it, so need someone to say ' hey, stupid' this is how it works..help and advice here would be appreciated...My other choice is to flip and take the money into the next deal, but I do like the idea of 'Oil well's' just pumping cash flow each month, but again, I can't get over the 20K loss, and I'm sure an investor won't either.

[Britton Durbin]

@Michael Brindley

So the key is to find a deal where the numbers work out where you dont leave money in the deal.

So if you estimate your property will be appraised at 220k after doing your homework, and you know your refinance is 70% LTV, you then know to get all your money back out will mean you need to buy and rehab for 154k or less.

So its about getting all your numbers as accurate as you can and then seeing if they work for you or not. Which as you can see means finding that good deal isnt always easy.