BRRRR with cash only or hard money?

[Chris Duffy]

Hi everyone, 

Most of what I've read/heard about the BRRRR strategy is the purchase should really be done with cash in order to increase the velocity of the money by reclaiming the capital/making yourself more competitive/you're likely purchasing something that won't qualify for financing.

I see the logic behind using cash for the competitiveness and financing aspect but am a little hazy on why the purchase needs to be cash and want to make sure I'm getting this correct. For example, If I go after a 100k property with 40k of my own capital(20k down payment and 20k construction costs for example) and after rehab my ARV is 160k and a bank will loan 75% LTV after a seasoning period, it would look something like this: 75% of 160k = 120K. 120k-80k mortgage = 40k. Is the issue here that would slow me down being that now I'd have a mortgage on the original 80k and the new 40k the bank is giving back to me in the re-fi?

Thank you for your help