Please Help! - What am I missing with Cash-out Refinance?

[Grant Nash]

Each time I try and run my numbers for a cash-out refinance, the numbers don't make sense. 

If I'm required (by the bank) to leave 30% in the property...who is finding properties where they can make these numbers work?

I'm looking in Southeast Florida (Delray Beach/Fort Lauderdale/West Palm Beach) and Columbus/Dayton, OH

Many of my properties are coming from the sheriff sale/bank-owned auction and I STILL can't squeeze these tight enough...maybe someone can show me what I'm doing wrong?

Showing property of interest below: This is what I'm understanding...

Property price: $210,100

Rehab: $30k

ARV:$270k

To please a bank, they will ask me to leave 30% in the property when I try and cash out...that's going to mean if it appraises to the expected $270k, I need to leave $189k in (270 x .7) However, I've already purchased it for $210,100...is anyone seeing the difficulty here? even if I got the bank to say I could leave 25%, that's $202,500. 

I have to be misunderstanding something in the BRRR process because people are making this work.

Please help!

Thank you!

[Nicholas L.]

@Grant Nash

I don't think you're missing anything, it's very tough to make a BRRRR work right now. With that said, typically for something to work, you have to buy it off market. MLS deals almost never work because they aren't distressed and can't be bought at a discount.

I'll give you a live example of one I just took a shot at here in PA. I made an offer on something the other day that needed an 80-90K rehab, and was going to be worth 180-190K fixed up. I offered 65, which was going to be tight, and got outbid. This property was severely distressed - nothing like what you posted. It needed a new kitchen, new bathroom, new floors, a new porch roof, and needed to be totally rewired. It wasn't going to be a "perfect BRRRR" but I thought it was a good one.

For the person paying more than me - maybe they know something I don't. Maybe they'll do the work themselves, or they have a way to get the ARV up that I don't know about. I can't worry about that, I just have to move on to the next one.

But again, with BRRRR, you need something distressed.  Pristine properties and even light cosmetic rehabs don't work anymore.

Hope this helps - happy to talk BRRRR or anything else you want