Help Understanding Refinancing

[Jared Baker]

Hello BP.

Hoping someone can help me better understand the refinancing part of the BRRRR. I understand the basic idea of the system and its very appealing. I'm working on fixing up a triplex and am ready to get another place, in fact I've already found another triplex which would be a great addition to my portfolio, but I currently don't have the cash for it. Looking down the road I want to get an idea of how the refinancing is going to work. Below are some of the numbers, I guess what I don't understand right now is how refinancing is going to help because I'm under the impression my monthly payment is going to go up?

Purchase August 2019
Purchase price: $155k
Rehab costs: $12k
Rent $700/unit = $2100/month
Current Mortgage: $620/month
ARV: $210k

I don't quite understand how getting a larger loan is going to benefit me as it would lower my cashflow on the current place?  I realize the numbers aren't great as this is my first deal, but since I am currently house hacking I'm actually saving quite a bit.  Hopefully someone can help me better understanding the refinancing part.