BRRRR lost in translation

[Tina Trussoni]

I am new to BRRRR, I have been flipping houses but want to supplement my income with positive monthly cashflow in rentals. Ok, this is where I get lost. My current example is: I have a flip house I am considering renting as it has not sold after several months. I have a total investment of 70k. However, if I refinance it getting 125k, paying 20% down on a 30 year mortgage that payment will be $570mo then there is taxes and insurance so am breaking even every month as I believe I will only get $750 mo rent. So yes, the refinance brings money for more investing, but not finding the monthly cashflow part of this. Can anyone help to explain what I am missing? Thank you

[Adam Gollatz]

@Tina Trussoni I dont know if I fully understand your example, but I understand your question. 

Thats because houses that work as flips, generally dont work as well for BRRR. For instance, you would flip a nice 4bed 2.5 house that might sell for 300k (buy for 120, put in 100, and maybe another 30k in costs leaving 50k in profit). But it would be hard to justify the rents of ~2200/mo to make that cash flow and cover maintenance, repairs, cap ex, etc.

I think in your example you might be pulling out too much money. You only want to pull out what you have put into it. You can pull out more, but you want to make sure that the cash flow from the property would cover it. If you have a place you bought for 50 and put 20 into it (70k total investment) you dont want to pull out 125k just because the bank will let you. 

Message me if you want to chat more.