BRRRR - Cash flow after refi

[Paul Wolfson]

Hi. I'm new to investing and BiggerPockets, and have heard a lot of great things about the BRRRR strategy. However, the numbers don't make sense to me.

I'm looking at a SFR property in a Los Angeles suburb. It is 500k (4bd 3ba) and needs a lot of help. With 20% down 30-yr fixed rate loan, the mortgage payment is about 2450/mo, tax and insurance included. The rent would go for about 2400/mo.

If I use 10% (50k) for rehab, let's say it appraises at 600k. I can now rent it out at 3000/mo.

After the appraisal, I do a cash out refi and pull out 75%. Since I put 100k down, in the beginning my loan is for 400k. After it appraises at 600k, my total equity is about 200k. 

75% of 200k = 150k 

So essentially, I pulled out my down payment and rehab costs.

But now my loan becomes 400k (original loan amount) + 150k (cash-out) = 550k. Is my logic right here?

The mortgage payment on 550k loan is about 3300/mo including taxes and insurance. But comparable properties in the 600k range are renting out at only 2950/mo.

So the cashflow summary is:

Before rehab and cash-out refi:$2400 - $3450 = -$50/mo

After rehab and cash-out refi: $2950 - $3300 = -$350/mo

Am I missing something? I just don't see how the BRRRR strategy makes any sense in terms of cash flow after the cash-out refi.

I get that you can raise rents, but the problem is, after the cash-out refi, your mortgage payments spike.

Thank you in advance.