Newbie Seeking BRRRRrrrrrr clarification.

[Mandana Shahbazi]

HI,

We are new investors and are trying to figure out the 3rd R in BRRRR. Refinance. So, the idea is that you refinance and 'extract the equity' and use it on your next BRRRR. Can someone explain it to me simply? If I purchase a home for $50,000 using a traditional mortgage and I spend $15,000 cash in repairs and the ARV is $125,000. I can refinance for 75% of $125,000 which is $93,750. The bank gives me a check for $93,750 and I pay off the first mortgage. This leaves $43,750. Is this the 'equity extracted'? The new refinanced mortgage is paid for by the cash on cash (rent).

Am I totally off base or is this how it works? 

(Yes, we bought the D Greene book.. it's on the way via Amazon)

Thanks for helping a newbie understand this,

Antonio & Mandana