BRRR Method Example

[Account Closed]

Question on understanding the BRRR method from a high level. For example, and I'll make it very basic and I understand it's more complex than this but, if I buy a house for 50k, put 20k into the rehab, and say it's done with cash so all in cash I'm at 70k. And the ARV is supposedly 100k. When I go to refinance after 6 months, and the bank gives me a 70% LTV (so 70k loan), here is where my questions start:

Do I now have 30k in equity in this house and the bank realizes that and can finance the 70k and make monthly payments on that?

I get a little lost on how exactly the refinancing works. Any explanation will help, if I need to clarify or provide additional information let me know please. I appreciate it!

[Jack Inman]

Yes, from the bank's perspective you'd have 30k in equity after the refinance. So, they'll give you a check for 70k and your monthly payment would be based on that 70k mortgage. Hope that answers your question; if not a little clarification might help.