Investing / BRRRR - ing in High Cost of Living Areas
I'm still new to REI and I understand how BRRRR works but it seems like it only works out in low to mid cost of living areas. I'm trying to understand how the expenses for a property in a HCOL area, like the boroughs of New York of areas in California, would be covered after a refi. Let's say a property's ARV is $750k. Acquisition and rehab costs is $600k and you're able to refi at said ARV. Assuming a 4.0% interest rate over 30 years, your mortgage payment is ~$3,000 monthly. That's not accounting for expenses like insurance, taxes (taxes in my area can be $1-$2k a month) , repair & maintenance, cap ex, property management, and other expenses. Are you really renting the property at $4000-$5000? or are you renting just to cover mortgage and insurance? Am I missing something? Outside of BRRRR-ing and using FHA loans, how can someone invest in RE in HCOL areas? How are you guys investing in HCOL areas?