Does BRRRR work with 20% down?

[Zach Shahan]

Hello,

I plan to speak with a bank on how the refinancing process works (that should help clear this up, too), but I was curious if BRRRR works with only putting 20% down?

It sounds like you are heavily relying on getting a LTV of 75% of your property's ARV. So some hypothetical numbers:

Property: $100,000 ($20,000 down, $80,000 private money lender)

Rehab: $20,000

All-in: $120,000

ARV: $140,000 (75% = $105,000)

This is where I get lost. Assuming I use a private money lender (and give them let's say 10%), I write them a check for $88,000 and I am left with $17,000. Meaning I currently have a cash-flowing property with $23,000 ($3,000 left-over from 20% down payment and $20,000 rehab) invested? How much equity is now in the house?

Is there any better way of doing this? Seems like having $23,000 invested with each property I purchase will take some time to build up capital in between properties.

Thanks for your time and help in advance!