BRRRR with no cash flow vs Flipping

[Isaac B.]

Hi all , I’d like some advice on my BRRRR strategy Currently the properties that I’m BRRRR’ing , at the refinance stage give me back all of my investment and sometimes more than my investment. However many of these rentals are not providing cash flow and some are negative cash flow. I’m comfortable covering the negative cash flow with my Flipping income and keeping a reserve to cover issues that come up I believe that generally it’s a poor business decision to purchase rental properties with no or negative cash flow and relying on appreciation however since my all in cost is zero or negative (because I profit from the refi sometimes) I’m wondering what you all think about doing BRRRR’s with no cash flow or if I’m better off flipping these properties. I’m comfortable holding these properties long term but would be relying on appreciation long term. Thanks in advance for the advice Isaac

[Mike B.]

@Isaac B. - I honestly think it's silly to do a BRRR and NOT have any cashflow after the REFI period. The whole point of all of this (REI) is to make money. Why would you want to lose it? I can understand you want to recoup your investment by doing the cash out refi, however your goal should be to also cashflow after the Refi. I consider this with all my BRRRs and ONLY do a property if I'm going to make a some good cash (NET) each month.. else I pass on the deal.

Perhaps when doing your refis, leave some skin in the game, e.g. $10K, if it would yield you $200/month NET for example. If you did this for 10 homes, you would (in theory) make $2K/month in passive income.