I want to BRRRR, but the numbers tell me no...

[Joshua Top]

We are finishing a couple flips in the next 60 days. Time to decide what to do with the houses. I am open to the BRRRR method, but I don't think it works very well in my current market. Here are the rough numbers on one of the houses, both are similar:

Total investment (acquisition, remodel, carrying costs) - $200,000

Current value (after netting out selling costs) - $270,000

Potential Rent - $1,500/month

I can do a refi and get my $200K back out of the project, that leaves me with a mortgage payment of $1,400 including taxes and insurance (assuming 30 yrs. at 5.5%).  Even though the houses are both completely remodeled, I would still set aside the extra $100/month for maint/repair.  After accounting for vacancy, I would lose money every month.  

I would love to hold on to these houses but all signs point to selling and taking the tax hit.  i'm not complaining, paying taxes means that I made money.  Any insight from forum members would be appreciated.       

[Kuba F.]

Don't fight the numbers.  Unless you're planning on significant appreciation or rent increases this is likely a loser, although ultimately I would decide based on the potential internal rate of return for the duration of the investment, to see whether you can invest that money for a better return elsewhere.