I still dont quite get the refinance in BRRRR investing HELP

[Nicole Wood]

I've read articles, watched webinars and listened to podcasts however I still don't quite understand the Refinance part of the BRRRR strategy.

If I were to get a house for 60 k the ARV being 110k and put 20 k into it that leaves me 30 k in equity. refinancing out of that loan would pay off the old loan still only leaving 30k to reinvest using a heloc...this is the part thats confusing me because everywhere else they're saying you would get 70% of the 110k which makes no sense...can anyone explain this process a little better?? Please.

[Chris T.]

Originally posted by @Nicole Wood:

okay, so since i've posted this i've been searching the forums for this same answer and I guess what i wasnt seeing was it was a CASH OUT refinance. So now lets see if a house was bought for 60k arv 130k rehab 20k you would have 80k into it you refinance you'd get at most 97,500 for new loan 80 of that would cover old loan and rehab costs so you'd have 17k more than what you put in? however not really...because you have a new loan that still has to be paid...but youd get that 17k in cash and be able to pay a down payment on a new deal even though the mortgage payments would raise some?

So it depends on HOW you use to come up with $60K + $20K. If you use cash, then the bank (from the NEW loan) would have given you a check in exchange for a mortgage. If you use a HELOC, then the new loan pays off that amount, so you can reuse the line again. If you use private money or hard money, the new loan pays off the old loan and you can use it (private money or HML) again.

That is how you "recycle" the money over and over again.