First BRRRR - I'm on the last two R's

[Chris Momongan]

Started my first BRRRR project in Sept 2022 in Augusta, GA. Purchased house at 87k and Rehab took 3 months and was about 40k. Spent 1 month preparing to get tenant in and chickened out of long term landlord and decided to change strategies and do Short Term Rental. Next two months we furnished the place for 5k while living in it and then bought a new owner occupied home in March 2023 to move into. Our short term rental went live in April, just in time for Masters week. We made enough revenue to cover a third of the years expenses and now addicted and want to scale.

Its early May and looking at options on how to buy our next property. I am looking to refinance. The ARV is 160k which would give us 39k if we did a refi. Was thinking of using that 39k for down payment on a fix and flip hard money loan that would finance 80% of purchase and rehab. Is this how it is usually done? Is there anything I'm not considering or is it that simple? I want the cash needed for the next project to be around 25k so I can use the rest as reserves/emergency fund.

PS: Our current reserves is 10k which makes me nervous.