BRRRR question- 1 percent rule

[Courtney Robinson]

I'm about two hours into the behemoth BRRRR book. I have a question when pulling money out of the home and the one percent rule.

I understand that the home should rent for one percent of the total cash invested. Got that part.

The part I don’t understand is how much cash should I try to pull out? Say a home is worth $100,000, I cash out refinance to get 75,000 back. The home rents for $850 (market rate). With the taxes at $1700 per year and the insurance at $1100 per year included in my payment at 5.75 interest (the going rate with local community banks), my monthly payment is $682. That leaves me little money for property management and repairs.

Do I need to be looking in higher rent areas? I have yet to analyze a deal that would provide a good cash flow over $100-200 a month per unit doing the BRRRR method. I know people are BRRRRing in my area, I just feel like I'm missing something.