BRRR only works in certain markets?

[Jason Zhang]

Newbie here. I'm been looking for deals that I can implement the BRRR strategy. Correct me if I'm wrong...BRRR will only work in a market where people can buy retail and still cash flow? Because it assumes refinance at the new appraisal value, which is retail price, to get my investment back. That being said, if market retail price is 400k, market rent for that is 2000/month.. I can't really refinance out what I put in..

[Christopher Phillips]

@Jason Zhang

I see what you mean. That would be the After Repair Value or ARV. You are correct. The property would need to cash flow after you do the refinance at 70% of ARV. Otherwise, you wouldn't be able to get your investment back out and still cash flow. But, that still gets back to my point that the property needs to be purchased at a deep enough of a discount to make it all work.