Need Help with Tucson BRRRR Property and Refinance Strategy

[Trevor Muzzy]

Hey BP!

I am currently rehabbing a property in Tucson and am encountering an interesting situation as I run the numbers on the rehab and refinance. I purchased the property at 106.5k with a conventional 30% down loan and am looking to put 30-40k into the property rehab. I've had several real estate agents tell me that they expect the property to reappraise for 175k minimum and possibly up towards 200k (I realize that's not official but it's a ballpark estiamte). My concern is that right now the property cash flows really well with my conventional mortgage at 106.5k and 1200-1300/month of gross rents, but when I go to refinance that my monthly payment will jump up and the property will no longer cash flow (IE the property no longer fits the 1% rule). My goal is to hold onto this property for a long time as a buy and hold but I need it to keep cash flowing.

Does anyone have experience with a a similar situation who can offer suggestions about if/when I should refinance? How can I structure the refinance (larger downpayment?) in order to keep my monthly payments low and continue to cash flow the property?

Thank you in advance for your advice!

-Trevor