Having Trouble with the BRRRR Method and Spreadsheet

[Phil Petite]

Hello Everyone!

I have two rentals in Memphis. Both are 3BRs, and they both have Section 8 tenants in place. One home is being rented for $1100/month and the other is getting $1250/month. Both homes were purchased in cash, so I do not have any debt on either property.

I'd love to do a cash-out refi on either home in order to buy another rental, but I am not sure if I'm missing something with the BRRRR method and would appreciate some guidance.

Current Rentals' ARV: $125k for both (slightly conservative # here)

Purchase Price for 3rd/new rental: $100K

Rehab Needed: $2.5k (tenant currently in place, just needs punch list items taken care of)

Gross Rental Income: $1500/month

I guess what I'm having difficulty with is how much I'll be able to receive back from the re-fi that I can use towards the purchase of this 3rd property. I calculate that 75% of the ARV on a home worth $125k is around $93k, but this is where I get a bit lost in the process.

Any advice/guidance would be amazing!! Thank you in advance!!!