Cash Out Refinancing Clarification

[Benjamin Pflaumer]

Hello. I am hoping I can get some clarification and explanation on cash out refinancing. From what I have read and heard investors speak a lot about buying a property, doing some renovations and then doing a cash out refinancing. This concept this has me a little confused. It always helps when there are some numbers involved. 

Let’s say the property is $100K. Investor puts 20% down and gets a mortgage for the rest. Investor puts 30K of renovations into the property. This is where I start to get confused. I would assume now the property would be worth at minimum 130K. When doing renovations does an investor always have to have the cash on hand to do the renovations or are there loan options? Does the lender giving you the loan on mortgage also able to loan you the money for the renovation? Once the renovation is done, from my understanding, you go back to the lender and ask to refinance the property for the new appraised value and if there is a positive difference between what you own the lender and the new value the lender will give up to certain percentage of the cash?

Any help on helping me further understand this would be greatly appreciated. 

Thanks!