BRRRR Investing FAQ
10 frequently asked questions about the BRRRR real estate strategy: infinite returns, refinance LTV, seasoning periods, DSCR requirements, and common mistakes.
What does BRRRR stand for?
BRRRR = Buy, Rehab, Rent, Refinance, Repeat. You buy a distressed property below market, renovate it to force appreciation, stabilize it with a tenant, do a cash-out refinance to pull your capital back out, and repeat the cycle with that recycled capital.
What is an infinite return in a BRRRR deal?
Infinite return occurs when your cash-out refinance pulls out all the capital you invested (purchase + rehab + closing costs), leaving zero dollars of your own money in the deal, yet the property still produces positive cash flow. ROI is mathematically infinite because you're dividing cash flow by $0 invested.
What LTV can I expect on a BRRRR cash-out refinance?
Most conventional investment property cash-out refinances go to 75% LTV. Some DSCR and portfolio lenders offer 80%. Using 70 to 75% in your underwriting keeps your projections realistic for most markets.
How do I find BRRRR properties?
BRRRR properties need purchase + rehab costs under 70 to 75% of ARV. Top sources: MLS properties with 60+ days on market, off-market motivated sellers (absentee owners, pre-foreclosures, tired landlords), and wholesale deals from local wholesalers who know your buy criteria.
What is the seasoning period for a BRRRR refinance?
Conventional Fannie/Freddie loans require 12 months of ownership before a cash-out refi. DSCR and portfolio lenders sometimes allow 6 months. Some lenders will refinance based on appraised value immediately using the delayed financing exception (for cash purchases).
What if I can't pull all my money out in the refinance?
Not every BRRRR deal produces an infinite return, and that is the ideal, not the requirement. A deal where you leave $10,000 to $20,000 in can still be excellent if the cash-on-cash return on that remaining capital is strong (15%+) and you hold a long-term appreciating asset.
Can I use hard money for the BRRRR purchase and rehab phase?
Yes. Hard money is very common for the buy-and-rehab phase of BRRRR. You close fast with hard money (12 to 18 month terms), renovate, stabilize with a tenant, then refinance out of the hard money into a long-term DSCR or conventional loan.
What DSCR ratio is required for a BRRRR refinance?
Most DSCR lenders require 1.20 to 1.25. DSCR = monthly rent divided by monthly mortgage payment. Build this check into your underwriting before acquiring the property. If the projected rent doesn't cover the new mortgage at 1.20x, the deal won't refinance as planned.
How is BRRRR different from flipping?
Flippers sell the property after renovation for immediate profit. BRRRR investors keep the property as a rental and refinance to recapture capital. Flipping generates cash now; BRRRR generates long-term cash flow and equity while recycling your capital into the next deal.
What are the main risks of the BRRRR strategy?
Main risks: (1) Overestimating ARV, meaning if the appraisal comes in low, you can't pull your money out. (2) Rehab cost blowouts that reduce or eliminate the refinance pullout. (3) Vacancy at refinance time, since most lenders want a leased property. (4) Rising interest rates shrinking refinance proceeds and cash flow. (5) Hard money timeline pressure from slow rehabs.