Clarification on Using Hard Money for BRRRR Strategy
I was listening to the episode of the Bigger Pockets podcast that talks about the BRRRR (Buy, Rehab, Rent, Refinance, Repeat) investment strategy and remember that they suggested that people who do not have $90k in cash lying around could use a hard money loan to fund their first deal, then reuse that money to buy more houses.
What confused me is if you borrow $90k from a hard money lender, then rehab it so that the house is now worth $120k, then refinance for $90k with a traditional bank, don't you now owe the entire $90k sum plus interest back to the hard money lender? Now how do you fund your next deal? You now have a house with cash flow (hopefully), but now I'm stuck back at a spot where I don't have $90k to invest in my next house. Am I misunderstanding somewhere?
If someone could clarify that'd be awesome! Thanks y'all!