BRRRR vs. Flip (the numbers)

[Andrew Savage]

I got my first multi-unit rental last year, cash flowing well, looking to BRRRR on my next. I know the rules (1%, 70%, etc) are just guidelines, but I'm looking for clarity on how to apply them. I'm getting hung up on how to decide whether, after rehab, to sell or hold. Look at the below example:

PURCHASE PRICE: 40k

REHAB: 55k

HOLDING COSTS: 5k

TOTAL INVESTMENT: 100k

ARV: 150k

RENT: 1100

After the rehab is complete, before refinancing, should I look at it like I'm purchasing the property for the ARV? The purchase, rehab, and holding are all sunk costs. 1100/mo doesn't look bad on a 100k investment, but that's all cash or a high interest loan (hard money). With the refinance, I'm essentially "purchasing" a 145k property that only rents for 1200, and that's not a stellar deal. Thus, I shouldn't "purchase" it, but rather sell for a 50k profit (less selling/closing costs). Again, I know all the rules are just guidelines, I'm just looking for some feedback on how I'm thinking it through. Thanks for the help!!