Frequently Asked Questions
What does BRRRR stand for?
Buy, Rehab, Rent, Refinance, Repeat. The strategy aims to recycle the same initial capital across multiple rental properties by pulling equity out through cash-out refinancing after the renovation raises the property's value.
What is a typical BRRRR refinance LTV?
Most conventional and portfolio lenders offer 70-75% LTV on investment property cash-out refinances. Some lenders go to 80%, but at higher rates. The exact LTV determines how much capital you recover.
What is the 70% rule?
A rule of thumb that limits your maximum purchase price to 70% of ARV minus rehab costs. Staying within this ceiling usually ensures a profitable refinance.
What is seasoning and why does it matter?
Seasoning is the period between when you purchase a property and when a lender will refinance based on ARV rather than your purchase price. Typical seasoning requirements range from 6 to 12 months.
Can BRRRR work with high interest rates?
Yes, but higher rates increase the new mortgage payment and reduce monthly cash flow. Model the post-refinance cash-on-cash return before committing to the deal.
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