BRRRR - Refi cash out amount

[Ben Raef]

When analyzing a long term rental deal how do you determine the appraisal value? In my analysis I am using the ARV as the refi appraisal amount. Trouble is the monthly mortgage increases based on the ARV or appraisal value from the lender. For example: Cash purchase price $50k ARV $100k 75% cash out refi The good part is I can get all my cash back. The down side is the mortgage on $100k does not give me the monthly cash flow I'm looking for. What am I missing? Thanks for your help BP!

[Pat McCandless]

From your example, the mortgage wouldn't be on 100k, it would be on 75k.  So based on that, are you cashflowing with a 75k mortgage?

it's a 75% cash out refi on the ARV. So if your ARV is 100k, then the refinanced mortgage would be a 75k mortgage. If you were "all in" at 50k then you would actually be making a profit of 25k but I'm assuming you are putting money into a rehab. So if you put 25k into rehab, your all in would be 75k and your refi would be 75k so you would essentially be getting your investment paid for and now you own a cash flowing property.