Can anyone explain the concept of BRRRR?

[Sarkis Boyadzhyan]

Made up example:

(Using a private lender)

Purchase price= $60,000

Repairs= $15,000

Closing costs= $4,000

ARV= $120,000

Loan amount after refinance @ 75% LTV= $90,000

Closing costs/interest after refinance= $6,000

What was the whole point of this? Why is it more attractive than the traditional method? I will try to answer my own question but feel free to correct me, add more, or agree!

1. You find a property which is under market value/discounted
2. You find a private lender or anyone who can put down all the funds needed
3. After repair/rehab you get a new value to the property so it's called the ARV
4. Refinance with a 70%-80% LTV
5. Here is where I get a bit confused and let's use the numbers in my example above. 

Now is the "loan" actually a loan? The bank is loaning you $90k for this property? You made the property valued at $120k so during the refinance the bank says "here is $120k for you to borrow", is this correct? There is $30k equity here. Is this being leveraged as if it's your down payment? Is this the whole point of the BRRRR? I mean there is no money out of pocket from you. Is this the whole point? Using this example: the ARV was $120k, so the majority of that piece goes to pay back the private lender/entity who initially funded the beginning process (purchase price, repairs, closing/interest). At the end, you're left with $5,000 (Loan-Total Funding= $90k-$85k).

Basically, BRRRR allows you to start a rental property without having all the funds in the beginning. It's like the traditional method but without the $$$ from your own pocket. The trick is to find a cheap property that needs rehab and having another individual/entity pay the total costs initially. Then the other individual/entity gets paid back after refinance via the LOAN due to an ARV. The extra cash left is yours plus a new cash flowing property. Is this it? Have I grasped the concept of the BRRRR method?

Thanks!