BRRRR method using LTV refinancing

[Elliott Holdosh]

Can someone please explain to me how LTV works within the BRRRR method? I am confused on how I am able to pull my money out of each deal after repairing and refinancing it with LTV loans. Could someone walk me through how that is possible? I am currently reading BRRRR by David Greene and trying to figure it all out!

[Tom Shallcross]

@Elliott Holdosh - I'll use a high-level example below to try and demonstrate.

You buy a building for a 125k and put 50k of rehab into it plus holing/closing costs of 15k, you're all in for 190k.  

Every lender is different, but once stabilized, most lenders will give you a loan for 75% LTV of the appraised value. You go though your loan process and appraisal comes in at 250k.

Your loan will be 250*.75 = 187.5k 

You pull out majority of your 190k through this refi, regardless of how that original 190k was financed.