Cash Out Refi - Expense Applied Where?

[Ed Sautter]

Hi, When analyzing property and wanting to BRRRR, do you apply the monthly loan expense to the property with the refi loan, or apply it to the next property to buy? I've also remember reading some controversy about whether the loan should be applied to property analysis at all? ...which to me seams like YES because it reduces your ACTUAL cash flow. I've also heard that some Investors only use the loan's interest as part of the property analysis. Thanks for reading... just call me "Confused in Syracuse", LOL.

[Ronald Starusnak]

Here is everything I track. I track all loan expenses, closing costs of the initial purchase and closing costs of the refinance loan. I add my holding costs from the first loan or before we refinance I to a long term loan into my rehab budget to make accounting easier. I do all of my buying in and around Syracuse too. Then I play around with different scenarios, rental rates, rehab budgets, etc. See what would be pushing my limits of making sense for me.