BRRRR: Estimating ARV Mortgage Payment

[Daniel Mendez]

Good morning BP,

One of the things I have learned about real estate is to always make sure to calculate whether or not the property that you will be investing in will be profitable in the long run.

However, I am still confused about something.

When I calculate the mortgage, do I estimate the mortgage payment based on the ARV of the property?

For example, I purchase a property for $80,000 and I estimate the mortgage to be $800. I also find out that properties for that size rent for $1,100. However, the ARV of the home is now, hypothetically speaking, $140,000 and I refinance it and now my mortgage comes out to $1,200. Now I am -$100 in the hole.

Am I correct?

Any guidance would greatly be appreciated.