Single-family BRRRR Only Cashflowing $100 after refi

[Wyatt Pfeifer]

Hi all! 

I am currently evaluating a single-family property that will end up being a BRRRR. The numbers of purchase price and estimated rehab costs all check out against the ARV. However, my issue I'm struggling with is the rent in the area is almost capped at $1100/month (realtor said she's never seen properties rent for even $1200 in the area). After the cash-out refinance, my cash flow is just at about $116/month assuming $1100/month rent and factoring in variances of vacancies and maintenance totaling $121/month.

After the refi, only $6000 is left in the deal, which is great, but I'm hung up on the "lower" cash flow. This would be my second property, so I would appreciate anyone who's been here before and if that low cash flowing deal worked, or became a nightmare. I understand every property is different and everyone's strategy is different, but I'd appreciate any advice someone may have!

[Joe Splitrock]

Cash flow is an illusion of profit. If you paid all cash for the property, you would have even higher cash flow, but a much lower return on investment. Cash is a tool, just like your time is a tool. If I offered you a job making $1000 a month or making $6000 a month, which job is better? What if I told you the $1000 job required you to work 2 hours a week and the $6000 job required 50 hours a week, which job is better now? Think of your cash like your time. Always look to maximize return on cash and return on time. This is how you leverage for growth.