1. Assume you buy a house for 60,000 dollars, then rehabbed for 40,000 dollars all borrowed from a hard money lender and for an ARV of 120,000. You then Re-Fi 75% for 90,000 cash out. In this case, not only do you not get all your cash out but you now owe 10,000 dollars. What do you do? Is there something missing here?
2. As an advice for (no money) first time investors, would you recommend flipping single homes for enough cash to reinvest or BRRRing multi-family? What is your personal best strategy for first timers?
Q#1 - Don't buy that house in the first place. Don't use Hard Money when the projected ARV won't get you refinanced enough to pay it all back.
Q#2 - Yes. Flip your initial Seed Money, and reinvest the profits in your nest flip...and repeat until you have enough profit to buy a rental property. Only use the profit...never touch the seed money. Repeat this system, using the seed money to gain profit, and spend the profits on rentals.
Sometimes that happens........
That is why it is always good for you to have skin in the game or your own funds into the deal as well.
This is why some investors think the BRRR strategy is risky.
But overall, had you paid market value for the property, at $120k - you would have $18k for a down payment into the property (15% down). So being out $10k is less than $18k and still a win in my opinion, plus you would have additional built up equity in the property.