Correct me if I am wrong, but it goes like this:

Investors give 40k USD to Branny. Branny buys a house, fixes it up, rents it to a renter. Now Branny has 0 USD but does have a house and a monthly income of (rent). So he goes to the bank and gets a mortgage on the house. Now he has a house, 40k USD and a monthly income of (rent-mortgage payment).

So he starts the cycle over again, Branny buys a second house, fixes it up, rents it to a renter. Now Branny has 0 USD, but does have two houses and a monthly income of ((rent) + (rent - mortgage payment)). He goes to bank for another mortgage, now he has two houses, 40k USD and a monthly income of (2 x (rent - mortgage payment)).

And the cycle can continue until you run out of houses, renters, or credit at the bank.