BRRRR Refinance Question About Equity Pay Out

[Carl Deeds]

Hello! I have a question about the BRRRR method that I cannot find an answer to. My question is this: Once you do a cash out refinance and get your check from the bank, doesn't that money have interest?
- As an example - 

Acquisition = 100k 

Rehab = 20k 

ARV = 165k

Refi @ 80% LTV = 132k

All in = -120k 

Cash out  = +12k 

When you refinanced with the bank to pay yourself back and cash out the equity, it’s not really cash because it has interest on it now, right? That 132k that the bank is giving you has interest on it because it’s a mortgage, so when you pay yourself back that 120k and netted 12k in equity pay out, aren’t you essentially just turning your original cash into debt that now has interest on it? 

I could be missing something here but it seems to me that you’re not really “cashing out” and if you take that 12k and invest into another property you’d just be bringing that same debt/ interest rate into the next property. Inherently, doesn’t this create a ton of risk? Tying all of your properties together by reinvesting the same capitol with debt on it seems like a house of cards. 

If someone can help me understand, I’d really appreciate it.