Understanding Brrrr strategy and private money

[Pedro Urena]

About the Brrrr strategy, this all sound great but, you are talking about getting private money to buy a property that needs to be rehabed so that you can increase its value, refinance and pay back the private loan. But, what if all the money you can raise is not enough to buy a property and only for a down payment. If you refinance now you gonna have two loans after paying the private money. Let's say I want a 3 fam that is being sold for 550k and needs 80k in rehab = 630k if all I can raise is 20% = 126k hoping to increase its AVR to 700k and then refinance, if I get 70% of the value= 490k i will be able to pay the private money back but, now I gonna have one loan to one or, two loans to different banks for a total of 994k. Am I getting This? I guess that total amount doesn't matter if all I care about is the cash flow from the prop. In NYC probably about 5,400 a month gross. But then, if I try to sell this property in 5 or 8 years it won't be valued at 994k. Please help me understand.

[Josh Caldwell]

@Pedro Urena I would suggest you look at a cheaper market  The Pittsburgh metro area has an average market value of 132k for a 3 bed 2 bath house in the suburbs. It is much easier to cash flow here and much cheaper to buy.  I am actually speaking to a group in Manhattan and one in Long Island later this year, because they are interested in my market.