Going through this myself as a newbie. After talking with my mortgage broker and a recommended hard money lender, this is how I understand it. You need to have 25-30% on the total purchase price + rehab costs as a refundable down payment.(IE: sale price $75K + rehab costs $25K = $25K to $30K just to get the hard money going). Fix the house quickly (45-60 days recommended). The value after repairs is $150K. My bank broker did not require a renter/occupancy for refi but I guess its good to do right away. Line it up while you remodel. You get an appraisal and refi with your bank on the hard money note, or cash out refi where you have enough equity to do this and still maintain 25% equity. So you refinance the 100K in order to cover the hard money note and you cash out $12.5K. At the end you can get your down payment back from the hard money lender and possibly get $12.5K on top to go into the next project (up to $42.5K). If you can't cash out, then you get your initial down payment back and you successfully have an income property in your name using other people's money. This is how it was taught to me through a broker and hard money lender.
For me, I have to take on a partner for the first part and either pay back with interest or split future rent revenue.
