Don't understand BRRRR strategy?

[Account Closed]

I was reading up about the BRRRR strategy and I don't understand how the refinance part works. Just wondering if I'm understanding this correctly. Thanks in advance!

Example

Property bought:  $75,000

Renovations:  $30,000

Total:  $105,000

ARV: $150,000

Then you refinance with your lender, and gives you 70%, which is $105,000.   What does this mean?  Your lender, who may be a bank, credit union, etc, will give you $105,000, but for what purpose?  Is it just equity you've built up after paying off the mortgage over time?  

When they give you the amount, does it act like setting up another mortgage?  Like now your making monthly mortgage payments for $105,000?

I'm really confused on this one!

[Ben Kirchner]

He would refinance for 70% of value, getting $105,000.  That would be the new loan amount, correct?

Since he bought the property for $75,000 and put $30,000 in renovations, he would be able to cover his expenses, and have a property to rent out while paying a mortgage for $105,000.  This is what my understanding has been, at least.  Please correct me, if I'm wrong.