BRRRR is an investment strategy: Buy distressed rental property, Rehab to rentable condition, Rent it out, Refinance to pull capital back out at the post-rehab value, Repeat with the cash extracted.
Financing sequence:
- Acquisition: hard money or short-term bridge loan covers purchase + rehab budget
- Stabilization: 3–6 months of seasoned rent
- Exit refinance: DSCR rental loan at the post-rehab appraised value, paying off the acquisition loan and returning the borrower's rehab capital
Key risks: DSCR fails the 1.20 floor if rents don't support PITIA at refinance leverage; ARV at refinance lower than projected, leaving capital stuck. Two-loan sequence requires a strategy-aware lender match.