Investor guide. Updated September 2026
How do you finance a BRRRR deal in 2026?
A BRRRR deal is financed in two loans. First, a short-term fix and flip style loan funds the purchase (up to about 90% of price) and 100% of the rehab budget for 12 months. Second, once the property is rented, a DSCR loan refinances it at up to 75% to 80% of the new appraised value, paying off the first loan and returning most or all of your cash. The math works when your total cost is at or below roughly 75% of the after-repair value.
The two loans, side by side
| Loan 1: purchase and rehab | Loan 2: DSCR refinance | |
|---|---|---|
| Purpose | Buy, renovate, lease | Pay off loan 1, hold long term, pull cash out |
| Sizing | Up to 90% of purchase plus 100% of rehab, capped near 70% to 75% of ARV | Up to 75% to 80% of appraised value, subject to DSCR of 1.0+ |
| Rate and term | 9% to 13% interest-only, 12 months | High 6% to mid 8% range, 30 year fixed common |
| Qualifies on | The deal, your experience, credit, reserves | The rent, credit, leverage |
| Closes in | 7 to 21 days | 3 to 5 weeks |
A worked Massachusetts example
Three-family in Worcester. Purchase $450,000, rehab $110,000, closing and carry $30,000. Total cost $590,000. After-repair value $800,000. Rents after renovation $6,600 per month.
- Loan 1. 85% of purchase ($382,500) plus 100% of rehab ($110,000) = $492,500. That is 61.5% of ARV, comfortably under the cap. Cash in: $67,500 down plus roughly $30,000 in closing costs, points, carry and reserves, about $97,500.
- Rehab and lease. Five months of work, one month to lease. Draws reimburse the rehab as it is completed.
- Loan 2. 75% of the $800,000 appraisal is $600,000. PITIA at a 7.5% rate is about $5,300, so DSCR is 1.25 and the loan qualifies. It pays off $492,500 plus accrued interest and closing costs and returns roughly $85,000 to $95,000 to you.
Result: nearly all of the original $97,500 is back in your account, you hold a stabilized three-family with $200,000 of equity, and the same cash goes into the next deal.
The rules that break a BRRRR
- Seasoning. Many DSCR sources want 3 to 6 months of ownership before lending on appraised value rather than purchase price. Some waive it when the rehab is documented with invoices and a before-and-after appraisal. Know which one your exit uses before you buy.
- The 75% test. If purchase plus rehab plus costs is more than about 75% of ARV, the refinance will not return your cash. The deal may still be a good rental, but it is not a BRRRR.
- Rent coverage. The refinance is sized by DSCR as well as value. High-tax towns and high insurance quotes can push the ratio under 1.0 and cut the loan.
- Timing. Loan 1 is 12 months. Permits, contractor delays and a slow lease-up eat that fast. Ask for an 18 month term if the scope is heavy.
- Appraisal. The refinance appraisal is the whole exit. Keep receipts, photos and a scope of work to hand the appraiser.
Cash you need up front
Plan for the down payment (10% to 20% of purchase), points and closing costs on loan 1 (roughly 3% to 4% of the loan), working capital for the first rehab draw, and 3 to 6 months of interest as reserves. On the example above that is close to $100,000 in verifiable liquidity even though most of it comes back at the refinance.
How 316 Capital runs a BRRRR
316 Capital is a private lending and capital advisory firm. We underwrite both loans at the start: the purchase and rehab loan is placed with one institutional capital partner, and the DSCR exit is pre-screened against the partners whose seasoning and coverage rules fit your timeline, so the refinance is not a surprise at month eleven.
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Request terms Estimate pricingCommon questions
How long do I have to wait to refinance a BRRRR?
It depends on the DSCR source. Common seasoning is 3 to 6 months from the purchase date to use the new appraised value. Some sources have no seasoning requirement when the renovation is documented. Planning the exit before you buy avoids the wait.
Can I BRRRR with a first-time investor loan?
Yes. A first project usually gets slightly lower leverage on the purchase and rehab loan, which means more cash in up front, but the refinance is unaffected because it qualifies on the rent.
What if the appraisal comes in low on the refinance?
The DSCR loan is sized on the appraised value, so a low appraisal leaves more of your cash in the deal. You can request a reconsideration of value with better comps, refinance with a different source, or hold the property and refinance again after 6 to 12 months of rent history.
Do I need to have the property rented before the refinance?
With most sources, yes, with a signed lease and at least one month of rent received. Some accept the appraiser's market rent on a vacant unit at a small haircut, which lets you close the refinance while the tenant search is finishing.
Can I do a BRRRR on a 5 unit or larger building?
Yes, with commercial-style products on both sides. The rehab loan is placed as small balance commercial bridge and the exit is a 5+ unit DSCR or bank loan. Leverage is usually a little lower than on 1 to 4 units.
316 Capital is a private lending and capital advisory firm. We arrange business-purpose real estate financing through institutional capital partners; loans are not available for owner-occupied primary residences. Figures on this page are typical market ranges as of September 2026 and are not an offer or commitment. Every quote is transaction-specific and subject to underwriting. Contact info@316cap.com or +1 (617) 546-4817.