BRRRR financing takes two loans: a short-term loan to buy and renovate the property, and a long-term rental loan to refinance it once it's fixed and leased. The first is usually a fix and flip (or "hard money") loan sized on purchase price, rehab budget, and after-repair value. The second is usually a DSCR rental loan sized on the new appraised value and qualified on the rent. If the property's value went up enough during the rehab, the refinance pays off the first loan and hands back some or all of your cash — which you use to do it again.
Here's how to fund each step, and where the plan usually breaks.
The five steps, and what each one needs
Buy
You need a property you can buy below its after-repair value — far enough below that the rehab creates real equity. This is where the deal is made or lost. Every later step depends on the gap between what you pay plus what you spend, and what it's worth when you're done.
Financing: a short-term acquisition loan. With our fix and flip program, that's up to 90% of total cost, capped at 75% of ARV, term 12 mo (18 opt.). Experience: None required.
Rehab
The renovation creates the value the refinance will borrow against. It needs a line-item budget, a contingency, and a timeline you can actually hit.
Financing: usually included in the acquisition loan. Our fix & flip loans can fund up to 100% of the rehab budget, as long as the total stays inside the leverage limits. Rehab money is typically released in draws as work gets done.
Rent
Lease the property at market rent. Two things matter here: the rent has to be real (a signed lease with a qualified tenant), and it has to be enough to carry the long-term loan.
Financing: none new — but the clock is running on the short-term loan, and you're paying interest every month until the refinance closes.
Refinance
Refinance out of the short-term loan into a long-term rental loan based on the new value. This is the step that returns your cash.
Financing: a DSCR rental loan. Our cash-out limit is up to 75% loan-to-value, the property needs a 1.05x minimum DSCR, and the term is 30 yr.
Repeat
Take the cash back out and do it again. Over time, a portfolio of refinanced rentals might belong under one rental portfolio loan.
A worked example
Here's how the numbers move through both loans. Illustrative only — your real numbers will differ.
| Step | Amount |
|---|---|
| Purchase price | $150,000 |
| Rehab budget | $50,000 |
| Total cost | $200,000 |
| After-repair value | $260,000 |
| Acquisition loan (lower of 90% of cost or 75% of ARV) | $180,000 |
| Your cash in (before closing costs, points, and interest) | $20,000 |
| Refinance at 75% of ARV | $195,000 |
| Pays off the acquisition loan | −$180,000 |
| Cash back at the refinance | $15,000 |
| Cash left in the deal | $5,000 |
On paper, almost all of your cash comes back. In real life, closing costs and points on two loans, plus months of interest and holding costs, mean you'll leave more in than that. That's fine — a BRRRR that leaves some cash in is still a rental you bought with far less than a traditional down payment.
The BRRRR calculator lets you add closing costs, hold time, and the rent check.
The rent check: where BRRRR deals quietly fail
The refinance is a DSCR loan, which means the property's rent has to cover the new payment — principal, interest, taxes, insurance, and HOA — at the program minimum of 1.05x.
Here's the catch: the bigger the refinance, the bigger the payment. Pull out the maximum, and the rent may not cover it. When that happens, the refinance has to be smaller, and more of your cash stays in the deal.
Run the rent check before you buy, not after the rehab. Estimate the after-rehab market rent, estimate taxes and insurance, and check that the rent covers the payment on the refinance you're planning. If it doesn't, the deal needs a lower purchase price, a cheaper rehab, or a plan to leave more cash in. Our guide on what a DSCR loan is explains the calculation.
Where else the plan breaks
The appraisal comes in low
The refinance is sized on the appraised value, not your ARV estimate. A low appraisal shrinks the refinance dollar for dollar times the LTV. Use a conservative ARV when you plan — the comps an appraiser would pick, not your favorite.
The rehab runs long or over budget
Every extra month is another month of interest on the short-term loan. Every extra dollar of rehab is a dollar that has to come back through the refinance. Put contingency in the budget and in the timeline.
The lease-up drags
No tenant, no DSCR. A few slow months of showings can push you up against the end of your short-term loan. If you need more time, a bridge loan can carry a rent-ready property through lease-up — but that's a cost you'd rather plan for than discover.
Seasoning requirements
Some refinance lenders want you to have owned the property for a certain period before they'll lend on the new appraised value instead of what you paid. Ask your refinance lender about this before you buy, so it doesn't ambush your timeline.
Why one lender for both loans helps
The gap between the two loans is where BRRRR deals get into trouble — two lenders, two sets of assumptions, nobody looking at the whole plan. When the same lender handles the acquisition and the refinance, the refinance gets sized before you buy, using the same assumptions about value and rent.
That's how our BRRRR financing works: fix & flip money on the way in, DSCR on the way out, and one plan for both. Tell us it's a BRRRR upfront and we'll size both loans before you commit.
A BRRRR financing checklist
Before you make an offer:
- Conservative ARV, based on comps an appraiser would use
- Line-item rehab budget with contingency
- Acquisition loan sized (lower of LTC and ARV tests)
- Cash for your share, closing costs, points, holding costs, and reserves
- Realistic after-rehab market rent
- Taxes and insurance estimated for the refinance payment
- Refinance sized so the rent clears the 1.05x DSCR minimum
- Refinance seasoning rules confirmed
- An LLC or corporation set up to borrow (why)
Got a BRRRR in the works? Send us the deal and we'll run both loans.
Business-purpose, non-owner-occupied only; entity borrowers (LLC or corporation) required; full recourse. Rates shown are the lowest offered and depend on borrower FICO, experience, and the deal. Points and fees vary. *Stabilized Bridge offers a no-DSCR option for properties listed for sale and a 1.10x exit-DSCR option for rent-ready properties. Not available in every state. Nothing here is a commitment to lend or an offer of specific terms; all loans subject to underwriting and approval.