good Brrrr deal? Help me analyze this deal

[Nestor Grajeda Jr]

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[AK Fowler]

@Nestor Grajeda Jr Just my opinion, I think you're starting off on the wrong foot with having negative cashflow. The idea of BRRRR method is that you're finding a deal that cash flows positive after repairs with the intent of cash-out refinance to take practically all of your money back out and still cashflow positive. you don't want an "alligator" something that takes money out of your pocket in order to have the property (that's just another liability, not an asset).

Example: 

Purchase Price: $60K

Rehab/Repair: $30K

Total Cost: $90K

Rental: $950

Expenses (50%): $475

Net Cash Flow: $475

ARV: $135,000

Refinance (70% of $135k): $94,500 cash to you.

30yr Mortgage (3.5% interest) on 94,500= $425/month

This is where it gets tricky because the expenses. Either the debt service is included in your expenses at 50% or the debt service is after expenses. But either way you have your money back and property will cash flow. Albeit only $50/mo. if you minus $425 mortgage from $475 in net cash flow. Then go find another property with similar opportunity. Keep in mind there are a lot of assumptions such as you're pay cash for the property and the rehab and also understand that this is considered a home run deal in my opinion, but hopefully you get the gist. Again, this is just my opinion.