The BRRRR method, and how to finance each step.

What BRRRR means

BRRRR stands for buy, rehab, rent, refinance, repeat. You buy a property below what it will be worth once it is fixed, renovate it, put a tenant in place, then refinance into a long-term rental loan on the new value. The refinance pays off the short-term money and, if the numbers work, hands back most or all of the cash you put in. Then you do it again.

The whole strategy hinges on the refinance. The buy and the rehab create the value; the refinance is how you get your capital back out to use on the next property.

Buy and rehab: short-term money

The first loan is a fix-and-flip loan: purchase plus renovation on one loan, with the rehab budget held back and released in draws as the work gets done. Draws are typically funded within three to five days of an inspection.

Lenders size it two ways and lend the lower number: up to 90% of cost (purchase plus rehab) for experienced investors, and about 70% to 75% of the after-repair value. Terms run 6, 12, or 18 months. If the property needs no work, it is a bridge loan instead, but then it is not really a BRRRR.

Pick a term with room to spare. Renovations run long, and extensions cost money.

Rent: what the refinance qualifies on

The refinance is a DSCR loan, which qualifies on the property's rent instead of your personal income. The rent has to cover the full new payment, principal, interest, taxes, insurance, and any HOA, with a ratio above 1.0. No W-2s or tax returns.

A signed lease and proof the rent is being paid make that clean, but the property does not have to be rented yet: a vacant property can qualify on market rent. The lender leans on the appraiser's rent schedule, so check what the finished property should rent for before you buy it. The DSCR calculator runs a market rent check on the address, and this guide walks through the math.

Refinance: getting your capital back

A DSCR cash-out refinance replaces the rehab loan with a 30-year fixed mortgage. If you renovated the property, there is no seasoning period: we can refinance on the new appraised value as soon as the work is done, instead of waiting months.

Cash-out goes up to about 75% of the appraised value, minus the payoff and closing costs. Some lenders go to 80% at a higher rate, but 75% is the practical ceiling we aim for. A single-family refinance takes about 30 days from a complete file, and it closes in your LLC. The details on timing and documents are in refinancing out of a rehab loan.

Repeat: the math that gets all your cash back

Here is the rule of thumb that makes BRRRR work: if your all-in cost, purchase plus rehab, is at or below about 75% of what the finished property appraises for, a 75% cash-out refinance can return all of it. Above that, some of your cash stays in the deal.

Run that test before you make the offer, not after the rehab. Each completed project also builds the track record flip lenders look at. Lenders generally treat five or six completed projects as experienced, and experienced investors get the higher leverage on the next buy.

Once you hold five or more rentals, a portfolio loan can put them under one loan and one closing.

Where BRRRR deals go wrong

The appraisal comes in low. 75% of a lower value leaves cash stuck in the property. Base the after-repair value on real sold comps, and we check values against county records and recent sales before an appraisal is ordered.

The rent does not clear 1.0. Then the refinance is smaller than planned, or does not happen. The fixes are more rent evidence, a smaller loan, or more cash in.

The refinance starts too late. If the rehab loan is about to mature, every week counts. Line up the refinance before the work is finished, so the lease, renovation costs, and payment history are ready the day the property is.