Question about the BRRRR Method Cash-out Refinance - First Rental Property

[Kyle Clover]

Hi everyone, 

I'm in the process of attempting to find my 1st rental for the BRRRR strategy and I wanted to make sure my math was right regarding the process.

For example,

If I purchase a property for 150K with a 30K rehab, this would make my total investment 180K. I would then initially obtain financing through a hard money lender who wants 20% down on a 180K loan, so I've currently invested 36K into the BRRRR (20% down of 180K hard money loan).

When I go to refinance out of the BRRRR through a traditional lender, I can obtain a loan with 75% ARV of the property? In the example above, would the ARV of the completed BRRR have to be 240K, so 75% of the ARV of the property would equal 180K? That way I could put a loan on the property for a total of 180K through a traditional lender, pay off my hard money lender, and recoup my initial 36K invested into the property. This would be my break even and I could then use the 36K to repeat the process on another property.

Thanks for your help everyone. I have been saving for a while so I want to make sure I understand the math so this first BRRRR is done right!