My understanding of BRRRR - Help understanding

[Gabriel Rodriguez]

Hello,

Let's say I bought a property for 100K, With a 20% down (20K) and then I put 20K in the renovation, so 120K total, and let's say it appreciates to 135K.

If I want to cash-out refi this property to move into the other one. I would refi for 80% which is 108K, which then I throw 80K to the first loan and then stay with 28K. I know that this new loan will have a higher amount, so the payment will be higher, but will it have a higher rate as well? My understanding is that a cash-out is basically a HELOC with a higher interest rate and interest that compounds more than a regular loan. So if I were to run number, I am already red in the beginning.

Am I wrong? Please, let me hear your opinion. Constructive criticisms are welcome :)

Gabe.