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Updated about 6 years ago,
BRRR strategy- after refi-payment goes up- breaking even
So been learning about the BRRR strategy lately. I'm trying to save to buy a house cash. I understand that I need to rehab then rent and refi. What I don't understand is that after refi the payment is going to go up taking all of the cash flow to new payment.
Say I was making $200 after getting a renter. Say I spent $60k on house. Put $25k in to rehab and was renting for $1,000. Then wanted to refinance for $120,000. Doesn't that $200 profit per month go into the new refi payment? I understand I would be getting my $ back out for the next house but seems like the first would be at a even cash flow or negative. Trying to understand that part of the process.