Buy, Rehab, Rent, Refinance, Repeat — BRRRR is one of the more familiar strategies in residential investing, and most investors can recite the five steps without much trouble. Where the strategy actually succeeds or fails, though, is a step most people gloss over: the refinance. Get that step right and you recycle most of your capital into the next deal. Get it wrong and your money stays stuck in one property indefinitely.
The Five Steps, Briefly
- Buy — acquire a distressed or undervalued property, typically financed with a fix and flip or bridge loan
- Rehab — renovate the property to rent-ready condition
- Rent — place a qualified tenant on a signed lease
- Refinance — pay off the short-term bridge loan with a long-term DSCR loan, sized off the property's new value and its lease
- Repeat — use the cash returned in the refinance as the down payment on the next deal
Why the Refinance Step Is Where BRRRR Succeeds or Fails
Two rules govern how much capital you actually get back at the refinance. First, seasoning: many DSCR lenders require you to have owned the property for a minimum period — commonly around six months — before they'll lend against the new, post-rehab appraised value rather than your original purchase price. Some programs offer day-one, no-seasoning cash-out based on ARV, but they're the exception, not the rule, so confirm this before you buy, not after the rehab is finished. Second, cash-out LTV: a DSCR cash-out refinance is typically capped somewhat lower than a purchase DSCR loan — often around 70%-75% LTV versus 75%-80% on a purchase — since the lender is releasing existing equity rather than simply financing an acquisition.
Cash Out Available ≈ (New Appraised Value × Max Cash-Out LTV) − Bridge Loan Payoff − Closing Costs
A Worked Example
Say your bridge loan balance to pay off is $185,000, and the property appraises for $300,000 after rehab and lease-up. Your DSCR lender's cash-out cap is 75% LTV.
| Max new loan (75% × $300,000) | $225,000 |
|---|---|
| Less: bridge loan payoff | −$185,000 |
| Less: closing costs | −$7,000 |
| Cash returned to investor | $33,000 |
If your original cash into the deal — down payment plus any rehab costs not covered by the bridge loan — was around $70,000, that $33,000 returned means roughly half of your capital is recycled and available for the next deal, with the rest still built into equity in this property. Full 100% capital recovery is possible on some deals, but partial recycling like this is the more typical outcome, and it's still what makes the strategy repeatable.
Before You Buy, Confirm
- Your target DSCR lender's seasoning requirement, so your refinance timeline lines up with your rehab and lease-up schedule
- That you'll have a signed lease in hand before you apply for the refinance — most DSCR lenders want in-place rent, not a market estimate, for the strongest pricing
- Your deal's cash-out LTV cap specifically, not the purchase DSCR maximum, since the two numbers are usually different
- Your DSCR at the new, higher loan amount — not the original purchase price — since a refinance that returns more cash but pushes DSCR close to 1.0 may not be worth taking
- Your bridge and refinance lenders' timelines are coordinated in advance, so you're not paying bridge interest longer than necessary while you wait on the refinance
The Bottom Line
BRRRR only works as a repeatable strategy if the refinance actually returns enough capital to fund the next deal. Model the cash-out math — seasoning requirement, cash-out LTV cap, and post-refinance DSCR — before you buy the property, not after the rehab is already done.