Can BRRRR ruin your cash flow?

[Mathew Hilton]

So for the BRRRR method, when you do the cash out refi and pull all of your cash out (making a new loan to pay off the first), can't this ruin your cashflow?

Quick example numbers:

Purchase price= $70k, Rehab=$35k

ARV=$150k, cash out refi 70% LTV= 105k (100% money out)

First loan 20% down (14k) at 4% interest= $334/month mortgage

Second loan at 4% interest= $716/month mortgage

Am I missing something? I understand that you should expect to increase the rent after it's newly rehabbed, but do you essentially need to calculate not just the ARV beforehand but also the target after repair rent that you should be renting for to ensure that you can cash flow after the BRRRR?