Does brrrr make sense when ARV is higher than rental rates?
I have one SFH rental in this particular neighborhood that has performed well. I bought it below market value, put in $8k worth of work and have good cash flow + appreciation. In less than a year I have had $22k give or take in appreciation. Since I am wanting to grow and preserve my capital I want to brrrr going forward, but I'm not sure it makes sense.
In this market today we are at $160-$170k ARV for a completely done property and rents are $1,450 to $1,650, depending on square footage, etc. This area also has fairly high taxes $3k-$4k/yr. So the 1% rule doesn't work due to higher taxes, more like 1.25% here.
If I want to pull out 100% of my investment, or as close to it my net cash flow will be $0-$100/m at best.
I'd like to brrrr to 10 SFHs. Rent them out for 5-10 years. Realize some appreciation gains, then sell 5 and use those funds to payoff the remainder 5. With the ARV to rent ratio where it is at does this make sense to do?