That's not necessarily a deal-breaker – it just means you need to be honest about what you're buying.A few thoughts on your analysis:**The Numbers Reality:**- $650/month negative cash flow is real, but your vacancy buffer might be optimistic.

Quote from @William Thompson: I’ve been seeing a lot more BRRRR investors surprised at the refinance stage lately — not because the rehab went poorly, but because the appraisal didn’t hit expectations.And it’s happening even on solid projects.What’s different right now Appraisers are leaning heavily on conservative comps and in-place rents.ARVs that penciled a year ago don’t always hold up in today’s environment, especially if:The rehab outpaced the surrounding compsRents aren’t fully stabilized yetThe property is one of the nicer ones on the blockThe investors still executing BRRRRs successfully are adjusting early:Using tighter ARV assumptionsLeaving more margin in the dealPlanning refis based on realistic, not optimistic, appraisalsBRRRR still works — but the buffer matters more than it used to.For those running BRRRRs right now — has the appraisal been the biggest wildcard for you, or is something else slowing deals down? 

Appreciate the added context — that refi decision makes a lot of sense given PMI removal + HELOC payoff.This is a great example of why headline BRRRR outcomes can look mediocre on equity, but still be excellent when the capital stack and DSCR buffer are handled correctly.Strong execution.

This covers you/owner for liability in the event they cause damage or do something stupid (but obviously won't cover their personal belongings) and provides a buffer before owner insurance would need to kick in.

Separate execution risk from valuation riskWhen ARV is reasonable, the real risk becomes:Permitting delaysContractor performanceTimeline managementThat’s where having scope, GC alignment, and buffers matters most.4.

Then reality hits: the contractor ghosted, two units need 5k more in rehab than budgeted, cap rate assumptions were off by 0.5%, and suddenly they're underwater on a commercial debt obligation with no experience buffer.2-4 unit deals are forgiving.

Quick gut check I like is target rent minus PITI minus 10 percent management minus 10 percent maintenance still needs to be positive with some buffer, and you want all in around 65 to 70 percent of ARV if you expect a clean refi.

That would help them build up some capital to have a buffer when they move into real estate buys in the IRA.

Budget conservatively, and always add a buffer for surprises.Get referrals for your contractor and build your team early: agent, GC, lender, and possibly a project manager if your brother can’t be full-time on-site.Feel free to reach out if you need any help.

Add buffers for delays.Account for risk.