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BRRRR - Buy, Rehab, Rent, Refinance, Repeat
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Updated about 3 years ago,

User Stats

25
Posts
13
Votes
Rhonda Davis
  • Investor
  • Alexandria, VA
13
Votes |
25
Posts

BRRRR and Decreased Cash Flow

Rhonda Davis
  • Investor
  • Alexandria, VA
Posted

I have watched and listened to many podcasts teaching the BRRRR strategy. It seems they never emphasize a due diligence step that is important to me. As I now consider making my first BRRRR move, my analysis involves looking at the property numbers even after the cash-out refinance. I mean, I go thru all the steps to calculate NOI, ROI, CoC, etc before making my purchase. So, shouldn't it be equally important to estimate applicable metrics, when my monthly P&I is going to change with the refinance?

Everyone uses the term “pulling money out”. To me, it’s borrowing more the second time than I did the first time on the same property, collecting the same rent. I know. I understand leverage, appreciation, and the Velocity of Money (I think). I will not pocket this pulled-out/borrowed money. I will reinvest.

Still, it seems this is an important point that should be made when teaching BRRRR. For example, my measly $300 monthly cash flow could end up being an even measlier (if that's a word) $200 a month.

It might not mean I shouldn’t do it. But it does mean I should calculate and consider it, during my initial analysis. Right? 

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