How a BRRRR deal is financed
- Buy: purchase with your own cash, a HELOC, a private or short-term loan, or a regular mortgage.
- Rehab: pay for the renovation from cash, a credit line or a purchase-plus-improvements mortgage.
- Rent: a tenant in place and a lease help the lender value the income.
- Refinance: a new appraisal on the after-repair value (ARV); most lenders refinance up to 75% to 80% of the appraised value and pay out the first loan.
- Repeat: the cash you pull out funds the next purchase.
What makes or breaks it
- The appraisal. The refinance only works if the property appraises near your ARV.
- Time. Short-term loans have costs, and many lenders want a seasoning period before refinancing.
- Rent. The rent must support the new mortgage (check DSCR).
- Costs. Include legal, appraisal, renovation overruns, vacancy and carrying costs.
Run your numbers first
Use our BRRRR calculator to see the cash left in the deal and the post-refinance cash flow, and the refinance calculator for the penalty and savings on existing mortgages.
Talk to us
We can structure the purchase and the exit refinance together so the plan holds up. Call or text (289) 513-3328. See also using home equity to invest.