BRRRR Financing
BRRRR Strategy Financing: Buy, Rehab, Rent, Refinance, Repeat
The investor strategy of recycling capital across multiple properties. Each step has specific financing tradeoffs, and the DSCR refi at After Repair Value is the engine that makes the math work.
Quick answer
BRRRR is the investor strategy of buying distressed property, rehabbing it, renting it out, refinancing into a long-term DSCR loan at the higher After Repair Value (ARV), then repeating. Each step has specific financing options and tradeoffs.
The five steps
- Buy. Typically with cash, hard money, or a short-term private lender. Speed matters more than rate at this step because distressed deals attract competing cash offers.
- Rehab. Pay for repairs out of pocket, from a rehab line built into the hard-money loan, or from separate construction capital. Target 3-6 months to completion.
- Rent. Stabilize the property with a tenant. Document the lease at market rent. Most DSCR lenders want to see signed lease before the refi.
- Refinance. Refinance into a DSCR loan sized to the new After Repair Value, paying off the acquisition and rehab debt.
- Repeat. Use the cash pulled out at refi to fund the next acquisition. The capital recycles into the next deal.
Step 1 financing: how to buy fast
- Cash. Best leverage if you have the liquidity. No interest carry, fastest close, strongest offer in a competitive deal. The catch: ties up capital until the refinance step releases it.
- Hard money. 12-18% rate, 1-3 points, 6-18 month term, interest-only. Funded fast (often 1-2 weeks). Property-focused underwriting. Standard tool for investors without large cash reserves.
- Private money. Relationship- based individuals or small funds. More flexible than institutional hard money but variable in pricing and terms. Often the cheapest non-cash option if you have the network.
- Standard investor mortgage. Slower close, full underwriting. Often not feasible on distressed properties that need rehab before a standard appraisal will value them.
Step 4 financing: the DSCR refi at ARV
- DSCR loan sized to the new appraised value. The post-rehab appraisal sets the basis; the loan amount is the ARV multiplied by the program LTV ceiling.
- LTV typically 75% on cash-out; 80% available on some programs at strong FICO and DSCR ratio.
- Seasoning requirement. Most DSCR lenders want 3-6 months of seasoning before lending at ARV; some require 12 months; some go to 90 days or less with completed-rehab and stabilized-rent documentation. We work with lenders going to the most permissive seasoning where allowed.
- Cash-out proceeds. Equal to (ARV * LTV) minus existing debt. If you bought all-cash, the entire amount comes back to you at refi; if you used hard money, the hard money is paid off first.
- DSCR ratio drives pricing. Higher DSCR (rent well above PITIA) lands you in the best rate tier; ratios at or near 1.0 price worse; below 1.0 require no-ratio program pricing.
Why seasoning matters
- Lender wants to verify the rehab is complete, the appraisal will hold, and the rental is stabilized with a real lease.
- Less seasoning means less lender comfort, which means lower LTV and higher pricing.
- More seasoning means more LTV available and better pricing, but it slows the BRRRR capital-recycle cycle.
- The investor calculus: balance speed of recycle against LTV and rate. Sometimes waiting two extra months for better terms is worth it; sometimes deploying capital faster matters more.
The math (illustrative example)
Illustrative only. Actual returns vary by market, rent, and operating costs.
- Buy: $150,000 cash purchase of a distressed property.
- Rehab: $50,000 in repairs and improvements over four months.
- Total in: $200,000 capital deployed.
- ARV after rehab: $300,000 (verified by comps).
- Rent: $2,500/month, signed lease.
- DSCR refi at 75% LTV: $225,000 cash out.
- Result: Recouped your $200,000 + an extra $25,000 of cash, OWN the cash-flowing rental, ready for the next deal.
When BRRRR works
- Distressed property at a significant discount to market.
- Realistic ARV verified by comps before purchase, not after.
- Rehab budget that does not blow up (contingency 15-20% on top of base estimate).
- Rental market that stabilizes quickly with reliable tenant demand.
- Operator with rehab project-management capability or a reliable GC.
When BRRRR doesn't work
- You overpay at acquisition and there is no margin for rehab cost overruns.
- Rehab costs balloon beyond budget without corresponding ARV uplift.
- ARV does not pan out at appraisal because comps softened during the project.
- Market drops between acquisition and refinance, eroding the LTV-based cash-out.
- Tenant turnover or vacancy stretches the seasoning timeline.
DSCR refi specifics for BRRRR
- Most lenders want clean title, completed rehab inspection, and stabilized rent at refi.
- LLC vesting is standard; member(s) with 20%+ ownership personally guarantee.
- 30-year amortization is typical; interest-only is available on some programs (improves DSCR ratio).
- Pre-payment penalty structures vary; common shapes are 3-2-1 step-down or 5-year fixed-prepay.
- See our full DSCR loan guide for the underwriting details that determine pricing.
Frequently asked questions
What does BRRRR stand for?+
Buy, Rehab, Rent, Refinance, Repeat. The five-step investor strategy: buy a distressed property below market, rehab it, stabilize with a tenant, refinance into a long-term loan at the higher After Repair Value, then use the cash pulled out to fund the next acquisition.
What loan do I use for the refinance step?+
A DSCR loan is the standard product for the refi step. The new loan is sized to the After Repair Value (ARV) and qualifies on the property's stabilized rent, not the borrower's personal income. LTV is typically 75-80% on a DSCR refi. The borrower's W-2 status, employment, or self-employment income do not enter the math.
How long is the seasoning period before the BRRRR refi?+
Most DSCR lenders want 3-6 months of seasoning after the acquisition before they will lend at the new After Repair Value. Some require 12 months. Some go shorter (90 days or less) with documentation of completed rehab and stabilized rent. We work with lenders going to the most permissive seasoning where allowed.
What LTV can I get on a BRRRR refi?+
Typically 75% LTV cash-out on a DSCR refi; 80% LTV is available on some programs at strong FICO and DSCR ratio. The cash-out proceeds equal (ARV * LTV) minus the existing debt (or zero if you bought cash). Higher FICO, higher DSCR ratio, and lower loan amount all push toward the better LTV tier.
Can I BRRRR with hard money or do I have to use cash?+
Both work. Cash is cleanest because you avoid interest carry during the rehab and seasoning period. Hard money is the more common path because most investors do not have the liquidity to deploy all-cash at scale. Typical hard money on the acquisition step: 12-18% rate, 1-3 points, 6-18 month term, interest-only.
Can I close the BRRRR refi in an LLC?+
Yes. LLC vesting is standard on DSCR loans. The LLC borrows, the member(s) with 20%+ ownership personally guarantee. Single-member, multi-member, and holding-company structures all work for BRRRR.
What goes wrong with BRRRR deals?+
Three things, in order: overpaying at acquisition (no margin for rehab cost overruns), rehab budget blowing up (always pad 15-20% contingency), and ARV not appraising at the level you modeled (verify comps before buying). Markets that drop during the project can also push the refi below the target LTV. We help investors stress-test the deal before they commit.
Price the BRRRR refi
Send us the acquisition cost, rehab budget, ARV, and target rent. We will price the DSCR refi across the wholesale market and find the lender going to the most permissive seasoning and LTV available for your scenario.
Eligibility, rates, and program guidelines vary by lender and are subject to change. This page is general educational information and is not a commitment to lend or an offer of credit. Equal Housing Opportunity.