Weaknesses of BRRR? Sell and cash out or Refi and cashflow?

[Kent Lord]

This post is my real life deal, I need to explore possible creative options.

Ideal Situation: Is to refinance the house and still cash flow. But be able to have enough cash for a 20% down payment but I would need about $40-60k to achieve that. What more important to me is doing another deal than cash flowing. 

Big Catch: In order to do this renovation, I quit working as a W2 employee, with my dad and am now doing my own electrical contracting work. Making pretty decent money with a more flexible schedule. But I cant finance with a bank anymore. Are the only options hard money and private money????? I dont plan on staying in the electrical business for long until I make it big in RE.

The Deals #'s : Currently under my first renovation of my duplex with a 30yr fixed mortgage. Berthoud CO

As a Flip

Purchase price- $265k 

$ down- 5% down

Mortgage: $1750 with mortgage insurance and escrow. 

Rent after renovation: Main house $1500/m, smaller unit $1000/m. = $2500

Reno cost: Main house- $50k, smaller unit - $20k = $70k  ($20k I invested my own $$, I need to raise $50k)

After Repair Value: $385k to $400k

Est profit if sold: [$265k+ $70k= $335k] [$390- $25k(agent+close)=$365k-$10k(est cost 50k loan)=$355k]

Total Profit as flip = $355k- 335k=$20k wow what a deal right?(sarcasm) These are very conservative numbers

As a Rental After Reno

Mortgage LTV: if 90%LTV of $390 then =$351k

Mortgage per month: $351k loan @5% int w/ $2k taxes yr = $2,200 month for mortgage payment(if I could even get it w/o W2)

Cash Flow: Rent $2500m - $2200m = $300 m (Is this worth it with only about $6k back into pocket?)

Cash back into pocket: Possible: $351k- $335= $16k - $10k (cost 50k reno loan) = $6k 

Rental summary: $6k to roll into next deal and $300m cash flow.  Is this even worth it knowing its a sellers market?

Big Main Summary Questions:

1. jf If I were to refinance this house, could I do so with out a W2 job anymore? And how long would it take this house to cash flow in order for it to be considered an asset and not a liability? (Where the house is income?) Do I need rental contracts?

2. If I was living in the smaller unit, could I have a leasing contract with myself in order to show the properties income? I mean I could essentially live rent free but I wouldn't want to jeopardize being able to claim this as income property and use it as collateral for my next deal.

3. How can I use this property as collateral for my next deal without selling it? But still being able to pay the $50k reno costs back? How bad does not having a W2 job hurt me? Does it force me to sell?

If you have come this far in reading this and decide to reply, let me just say, I highly highly appreciate you! Thank you so super mucho! If your local I would love to sit down and chat and Ill offer free (licenced and insured) electrical work for you and your family. 

If your new and read this and have similar situation, please leave a comment and let me know. Id love to connect.