Key takeaways
- 75% LTV refinance is the realistic ceiling.
- Buy at no more than 70% (ARV − rehab) for true infinite return.
- Stabilize rents 90 days before refinance.
- Use a DSCR lender at the refinance step.
- Always model a 'capital left in' scenario.
Core concepts
The 70% rule
Purchase + rehab ≤ 70% ARV gives margin for cost overruns and appraisal shortfall.
Refinance underwriting
Lenders use either appraised ARV or cost basis; know which before close.
Seasoning rules
Most lenders require 3–6 months ownership; DSCR lenders often 0–90 days.
Rent stabilization
Refinance only after lease signed and tenant in place — drives DSCR ratio.
Step-by-step framework
- 1Set ARV via 5 sold comps in last 90 days.
- 2Budget rehab with 15% contingency.
- 3Buy at 70% (ARV − rehab) ceiling.
- 4Execute rehab in 60–90 days.
- 5Place tenant; let lease season 30+ days.
- 6Refinance at 75% LTV with DSCR lender.
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Common mistakes to avoid
- Trusting Zillow ARV instead of sold comps.
- No rehab contingency.
- Refinancing before tenant placement.
- Assuming 80% LTV — most BRRRR refis are 75%.
Frequently asked questions
Will I always pull all capital out?
No. Plan for 5–15% capital left in as the realistic case.
Cash or hard money to start?
Hard money is faster; cash is cheaper. Use cash if available.
When does BRRRR stop working?
In appreciating markets where ARV outpaces purchase — eventually 70% rule fails.
Best lender for refi?
DSCR lenders — fewer seasoning requirements, no income docs.
Action checklist
- ☐Five ARV comps from last 90 days.
- ☐Rehab budget with 15% contingency.
- ☐Purchase ≤ 70% (ARV − rehab).
- ☐Rehab timeline 90 days or less.
- ☐Tenant placed before refi.
- ☐DSCR lender pre-qualified.
More from BRRRR Investing
Common BRRRR Mistakes
Most BRRRR failures trace to over-paid purchases, under-budgeted rehabs, or unrealistic appraisal expectations.
Beginner's Guide to BRRRR
Your first BRRRR — from finding a candidate property to executing rehab and refinancing without losing money.
Advanced BRRRR Strategy
Scaling BRRRR — parallel deals, portfolio refinancing, and creative capital stacks for experienced operators.
BRRRR Resource Center
Calculators, market data, and tools to underwrite, execute, and refinance BRRRR deals.
The 70% Rule Explained
Why the 70% rule still anchors BRRRR underwriting and when to bend it.
Finding BRRRR Deals
MLS, off-market, wholesalers, and direct mail — pipelines that consistently produce BRRRR-eligible properties.