Do I Understand BRRRR?

[Chris Marston]

Hi all! I'm new to REI and am trying to understand the BRRRR strategy. Can ya'll tell me if the hypothetical BRRRR deal makes sense. Thanks!

Let's say I buy and rehab a property for $50,000 (all expenses included here, I'm trying to keep it simple) and it's ARV (did I use ARV correctly?) is $100,000. I then refinance for 75% of ARV. The bank gives me $75,000, I "make up" the $50,000 I initially put into the investment and pocket an additional $25,000.

Does this make sense or am I misunderstanding how this works?

P.S. I'm also new to the forums in general and wasn't sure where to post this. Should I have posted this somewhere else? Is there a BRRRR specific forum around here somewhere?

Thanks again!

[Jaysen Medhurst]

@Chris Marston, welcome to Bigger Pockets. 

You'be got it down pretty well. The only piece you're missing is "Rent." You usually have to rent out the property before refinancing. That will make the bank a lot easier to deal with, since you're showing income.

And yes, you used "ARV" correctly.