Question about. BRRR

[Dror Brumer]

Hi All , 

I have a rental property I bought with LOC , The LOC rates are very high and I was thinking to take a mortgage on the house with a cash out option to invest in one more property

When I am running the numbers the mortgage rates will eat all my cashflow ( getting a negative of $68 a month instead of $200)

House cost 367K - House estimation 400K  - current loan amount is 255K  - looking to barrow 300K at the new loan   

What am I missing or is it due to the mortgages high rates ?

[Joe Villeneuve]

You gotta sell this property ASAP.  It's killing you now and your idea of a REFI would make it worse.

Right now, you have almost $150k in equity, and that equity is losing value fast.  A refi would make it worse since your CF would go down.  

That's not worth the cash you could pull out.  Your solution should be obvious...sell the property, grab all of the equity, and replace this "dog" with a property that does cash flow, and where your equity regains it's full value.

Right now, your $145k in equity is only worth $400k in property value.  That's only 2.7 times the equity...and it's getting worse each time the property appreciates.  Sell the property, and the new PV (5 times the equity, taking out for closing costs) should be around $850k...and, you should (better) have positive CF too.