BRRRR-Looking for further context

[Ravi Kimal]

I'm new to the real estate investment process and I'm trying to learn more about the BRRRR process. I was wondering if someone can explain the process further. I'm lost at the point of the refinance process. Let's say I find a deal that $60,000 and the ARV is $120,000. The total amount of money for repairs is $20,000. So I'm $80,000 in. And I get a renter in and not I'm about the refinance. The bank offers the 75percent after the refinance back to me. How I'm I making a CoCROI and able to use the money again?

[George C.]

Using your example numbers:

$60,000 Purchase Price

$12,000 down payment (this is an assumption of 20% that you did not include in your example but you should expect to put some of your own funding into this project)

$20,000 Renovation

At this point you are in for $32,000 of your money.

$120,000 ARV

$90,000 75% of LTV for refinance

$48,000 owed to bank (purchase price less down payment)

$90,000 less $48,000 (initial loan amount) less $20,000 (renovation amount) = $22,000 cash payout to you. You've gotten back the original down payment money of $12,000 plus $10,000 from the new equity you've built into the property that you can now use to start a new investment.