How BRRRR financing works, one loan at a time

BRRRR stands for buy, rehab, rent, refinance, repeat. It gets talked about as a single strategy, but BRRRR method financing is really a chain: a short-term loan to buy and fix, a long-term loan to hold, and the capital that comes back out, used on the next property.

Each link is a different kind of loan with its own underwriting. The strategy works when each one hands off cleanly to the next, and it stalls wherever one does not.

Once the property is finished and tenanted, a long-term loan qualified on the rent pays off the short-term one. The new lender underwrites the property as it now is, on its completed value and its real rent.

Timing is what trips people. The long-term lender may require a period of ownership before it lends against the improved value, and agency loans follow published seasoning rules. The seasoning rules are covered in the guide to cash-out refinance seasoning requirements. A buyer who paid cash has a separate route, the delayed financing exception, which has its own guide here.

Line up the exit before the entry. Know which long-term loan you will refinance into, what it will require of the finished property, and how its timing fits inside the short-term loan’s term. The purchase and the refinance on an investment property are both business purpose, available in any state.

Send the purchase price, rehab budget and expected rent, and the chain can be checked end to end before the first loan closes. This is not a commitment to lend.