BRRRR calc questions

[Ryan Saulle]

Hey BP members!

Question about the BRRRR calculator. I am messing around with it to see different results and had a question.

Example: I buy a house for 100k with all cash, put 20k rehab costs and i put in ARV of 200k. When i go to refi part for the loan, I put 70% of the ARV? So in this case for the loan amount I would put $140,000K? Monthly cash flow goes from $850 to $250 after refi, COC goes from 10% to inf%? What does inf% mean? and i would have invested $0 after the refi. Meaning i would get everything I put in back?

Then just to see, i edited and change the ARV from 200k to 250k, numbers pretty much stay the same except monthly cash flow after refi is almost negative. The property is worth more but I would be receiving less rent? Does that have to do with the loan amount I am taking out? If so how do you fix my number?

Thanks, 

Ryan

[Brent Coombs]

@Ryan Saulle, "inf%" occurs every time you're getting ANY positive monthly cash flow out of a property - while having NO dollars of your own left in the deal! In your first quoted example, you not only had none of your own money ($120k) left in the deal, but the Bank had given you an EXTRA $20k when you went to refi! So, why worry about the less monthly positive cash flow out of that ONE deal - when you'd now have ALL your cash back plus an extra $20k - to repeat, repeat!?

Of course, there IS a loan amount above which your cash flow WOULD be negative, not because you'd get less rent, but because you'd be borrowing too much against that rent! Get it? Cheers...