Foreclosure ARV Refi and 50% Rule/Cashflow For Buy&Hold

[Mehran K.]

Hi everyone,

I am wondering how others evaluate deals when they buy distressed properties with cash, rehab, then refinance afterwards with the new ARV appraisal. Not factoring in holding costs and everything.
Quick/Not Exact Example:
Purchase: $35k
Rehab: $30k
Settlement Costs: $5k
Total Initial Investment $70k

ARV/appraises = $100k
Refi @ 30% LTV to take out My Initial $70k
Market rent = $1400

Now, I know I should definitely aim to be cashflowing for sure even AFTER the new debt service is in the equation.

But where do you draw the line?
At the purchase price of $70k, the numbers are phenomenal.

When doing the deal analysis for the property at $100k it would be less phenomenal BUT I would get the property for practically no initial investment and can move on to the next.

Obviously anyone would take it if it cashflowed positive even after the mortgage. And as of right now I wouldn't do the deal unless it did. But I'm interested to hear your opinion/logic since I'm a newbie. Would you take it if it broke even? How about $50 negative?

Just hoping crystallize my strategy for my next deal (#2).

Thanks in advance