Glossary
BRRRR (buy, rehab, rent, refinance, repeat)
BRRRR stands for buy, rehab, rent, refinance, repeat. You buy a house below value, fix it, rent it, then refinance on the new value to pull most or all of your cash back out for the next deal.
A flip ends with a sale. A BRRRR ends with a long-term rental loan and a tenant. The goal is to own the rental with little or none of your own money left in it.
How it works
- Buy below value, often with cash or a hard money loan.
- Rehab to rental standard, which drives the ARV.
- Rent it, ideally with a signed lease before the refi.
- Refinance into a long-term loan, often a DSCR loan, sized off the new value and the rent.
- Repeat with the cash that came back out.
- Purchase / rehab
- $150,000 / $45,000
- Hard money loan (90% of price + 100% of rehab)
- $180,000
- Your cash in before the refi
- $32,000
- Appraised value after rehab
- $280,000
- New loan at 75% LTV
- $210,000
- Refi closing costs
- -$6,000
- Pay off hard money
- -$180,000
- Net refi proceeds
- $24,000
75% LTV and costs are illustrative. Refi terms vary by lender.
What to watch
- Seasoning. Many lenders cap the loan at your cost, not the appraisal, for the first months you own the house. In the example, 75% of a $199,000 cost basis is $149,250, not enough to pay off the hard money. See BRRRR refinance seasoning rules.
- Rent coverage. A DSCR lender sizes the loan so rent covers the full payment. A strong appraisal does not help if the rent is short.
- Appraisal risk. Run the deal again at 10% below your ARV.
- Rates. A higher rate shrinks cash flow and may shrink the loan.
Model the whole cycle in the BRRRR calculator.
Questions
Can you get all your money back on a BRRRR?
Sometimes. It takes a purchase and rehab well below the appraised value. If the refi loan covers the payoff, closing costs and your cash in, you have zero cash left in the deal.
How long do you have to wait to refinance a BRRRR?
It depends on the lender and program. Some refinance on the appraised value right away, others need 6 or 12 months or cap the loan at your cost until then. Rules vary by lender.
What loan is used for the BRRRR refinance?
Often a DSCR loan, which qualifies on the property's rent instead of your personal income, or a conventional cash-out refi. Terms and eligibility vary by lender.
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