BRRRR: Does the Refi eat up your gross rent?

[Adam Scheetz]

Here's a question for you about the BRRRR. I've put this to the forums and haven't gotten any responses back yet.

Here it is; 

When using the BRRRR method, and you refinance to pull the equity out in the form of cash (75%-85%), that new loan is based on the new appraised value of the house. Wouldn't that raise your monthly mortgage payment and in turn eat up what every gross rent you have. I have an example based on a Duplex I looking at. Here's my situtation: I am looking at a duplex in NJ which is a foreclosure. C-Class/Blue Collar neighborhood. Purchase price would be approx $90k , repair costs approx $20k, approx ARV based on multiple realtors is $200-$260k, expected gross rent $3700-$4100/mth. At $90k purchase price I'd be around $600/mth for mortgage. If the ARV puts me at let's say $220,000 my payment would jump to $1300/mth. I'd go from about $160/door (net), into the red. So for a Buy & Hold investment, what I am missing here that makes this seem like a crappy deal for long term and a sweet deal in the short term?

Much Appreciated, 

Adam Scheetz