Confused about the BRRRR method

[Rich Hupper]

I have 250k cash I can use towards a multi family purchase as gift money. Most of the 3 unit multi families I am interested in are 400k. being very conservative monthly rents would total 3300. 

Lets say I can get someone to give me a loan for the other 150k I would need to acquire the property. How do I get the 250k out of the property to give back to the person who gifted it. 

I am guessing I would need a new loan for 400k and I would need to increase the value of the property somehow to ( 400,000 / .75 = 533,333 )?

Thank you

[Max Householder]

Figure out the ARV, multiply by 70%, then subtract the cost of repairs to get your maximum purchase price.

Example: $100,000 ARV * 70% = $70,000 - $10,000 in repairs means you'll need to purchase this property at $60,000 or lower in order to BRRRR. So buy at $60,000, put $10,000 into it, you're all into a house worth $100,000 for $70,000 out of pocket. Then you refinance at 70% loan-to-value to get your $70,000 back and move onto the next deal.

If you do even better and get into the same property for say $50,000, you can pull out up to the 70-80% LTV to do a bigger deal next time or you can just get your $50,000 back and have a smaller mortgage payment and thus a higher monthly cash flow as a rental. As long as you're all in under that 70-80% number the bank will loan to you, there are a lot of options.