Brrrr Strategy( Need help)
I am in the process of reading the brrrr strategy book and I'm having trouble understanding how a person still has equity after they refinance. Lets say I get private money to fund a deal which is purchased for $75,000 including rehab cost. After I get A tenant in the deal and then refinance 4 to 6 months later. To my understanding they're going to give me a mortgage on the property and a 75% loan to value most likely. let's say the property after it is rehabbed is worth $120,000 and they let me pull out $90,000. If I still have to pay the private money lender then that only leaves me with $20,000 Worth of equity. I must be confused. Even if I use my own money and I got the bank to refinance and they gave me the money back since I put in a new mortgage on the house the money that the bank gave me for the refinance I have to pay back. Correct? I don't see how you can go into the next deal with a house that has a bunch of equity and cash flowing if you have to pay back the mortgage that the bank gave you on the refinance. I'm sorry for my ignorance I might just be confused. Any help would be great.