re: Information for my fellow Real Estate Investors

I've read this whole thread. Very good information. I'm considering dipping my toes into the REI world but I'm still gathering information. If some of the more seasoned guys could answer my questions below I'd appreciate it. I'll preface this by saying I'm very green so some of these questions might be illogical.

Help me understand the leverage scenario some more. I buy a house using some type of credit. Rehab the home. Then refinance and take the money and pay off the original loan. Here is where I get lost. Say the house cost $50k. I put 15K of rehab into it. So total loan of $65K. Appraisal comes back at 100K. I have 35K equity in the house. You can only get 80% of the value when doing a cash out refinance. So I take 80K and pay off the 65K. Now I have 15K. Do you take that entire $15K and put that into your next property? How do you ever make a profit if you're always putting your refinanced amount into other properties? Also doesn't refinancing raise your mortgage cost which in turn hurts your profit from your renters? I'm sure I'm missing something here or perhaps I'm looking at it the wrong way. To me it just seems like you swapped a $65K loan for an $80K loan just so you could have an additional $15K liquid.

What would you say is the average start up capital needed? I've talked my wife into letting me take 15-20k and throw at this but I feel like that amount is too small.

Is there a such thing as a house too far gone to consider buying and rehabbing? Just looking at property last night on the MLS I found a 1000sqft selling for $20k that I could buy and fix up with around $35k. So a total all in of 55k and it'd could rent for 650 minimum all day long. But it needs all the major work done to it. Is it better to shy away from these and stick to the homes in the <10k rehab range?

How do you make money with this? At first glance you think, "he has 4 homes renting at $1000 each He's making $4000 a month!" but then you start to add in the mortgage price and insurance, maintenance, fees, etc and you only clear $200 a month per house. Seems like a lot of risk for that small amount each month. I can see where it could be profitable in the future when everything is paid off but what about short time?

I keep reading that you can have up to 10 home loans. Going off the info in the first question and refinancing to an 80k loan this means you could have up to 800k in outstanding loans? Is the bank giving you these loans off the premises that they are rented out and is a source of income? Is it not dangerous to have that many and that large of an amount outstanding at one time? Seems like the risk out weighs the rewards there.

Like I said I'm sure I'm missing something or looking at it a different way because this is obviously a successful venture. I just keep getting hung on some of the things above. Again thanks for the answer and help.