Mortgages & Creative Financing

BRRRR Investors: Ready to Refinance? Consider 3 Key Components to Up Your Odds of Success

Expertise: Mortgages & Creative Financing, Real Estate Investing Basics
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Refinancing money out of a BRRRR property is always one of the high points in my investor career. Nothing feels better than closing on a refinance and having a cash-flowing property—plus money in your pocket to do your next deal!  

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Refinancing out can also be the most tenuous part of the BRRRR process

With that said, let’s discuss several keys to making your BRRRR refinance go swimmingly smooth, as well as steps you can take should it go sideways (or south).  

Who’s Involved in Refinancing?

There are three major players in a BRRRR refinance: 

  • You
  • The property
  • The appraiser

Let’s take a closer look at each one.

Your Role in Refinancing

Believe it or not, you have a huge impact on if the refinance goes through. The lender is underwriting you if you are using conventional lending and the home if you are using commercial lending (although you still have to sign a personal guarantee). 

house cutout and coins stacks increasing in height in a row on table

Here are some action steps to take to improve your odds:

  1. Line up your “take out lender” during your initial diligence of the property and have them pre-qualify you on the loan. 
  2. Have a good FICO score and reserves, so you can actually qualify for the new loan.
  3. Don’t change jobs, reduce your hours, or quit before your refinance is complete.
  4. Don’t make major purchases that would throw off your debt to income ratio (DTI) or deplete your reserves, or your lender may no longer see you fit to lend to.
  5. Don’t purchase more properties or execute other refinances without involving your lender to ensure that you can still qualify for the refinance loan.
  6. Partner with the lender to know what type of loan you qualify for and what type of down payment you will have to bring. The lender is a team member.  

Though this all seems to be common sense, I’ve seen investors get tripped up by purchasing too many properties at once, executing complex refinances on multiple properties at once, or being silly and reducing their hours at their job or quitting their job two weeks too early!

Related: The Essential 11-Step Guide to Refinancing Investment Properties (For BRRRR Strategy Followers!)

The Property’s Role in Refinancing

Another player in a successful refinance is the actual home and rehab. This work should be completed in the due diligence phase as you finalize all numbers for the purchase AND refinance at one time.

Have you run your numbers accurately?  

  • The property: Are you purchasing a property that is in a stable or appreciating neighborhood and market? If prices are declining, you will need to account for a decline in the ARV you desire (and ask yourself why you are purchasing in a declining area anyways!).
  • After repair value (ARV): Did you pull accurate comps for the level of rehab you are doing? Have you ensured your numbers work at the lower end of the comp range?
  • Taxes: Did you account for possibly losing a tax homestead exemption? When you purchase a home, the previous owner might have had a homestead exemption. An investor, at some point during the hold, will lose that exemption. The lender counts this as an expense in their underwriting. Also, is the local government raising property taxes? I had one home where the taxes tripled during the time I held it. (I now have sold it.)  
  • Insurance: Did you account for the difference in premiums in your post-refinance numbers? Again, the lender counts this as an expense. Have your insurance agent write a quote for the pre- and post-rehab home so you aren’t surprised.
  • Rehab: Did you bring the home up to market competition level? The appraiser will be looking at the recently sold properties and upgrading and downgrading your home to those retail sales. Make sure your home is on a similar level with regard to number of beds, baths, garages, and finishes. This does not mean over-rehabbing the property—just being on par! Make sure the rehab is also quality work. In addition, take care of major mechanical and foundation issues before refinancing, and keep all receipts.

If you have purchased a great home in a great market, run your numbers, rehab it to the competing market, and you should have a relatively good chance the refinance will go smoothly.

But there is still one hurdle to clear—and that’s the appraiser.

Young black couple using laptop at home look at each other

The Appraiser’s Role in Refinancing

At the time of this post, home sales are on fire and getting a timely appraisal is extremely challenging. (I’ve currently been waiting three weeks on three of my properties!) The lender doesn’t even get to choose the appraiser, rather they put in a request to an appraisal network. Most appraisers are solid and competent; we investors LOVE this type of appraiser. 

The BRRRR derailing wildcard is: what if you get matched to a less than ideal appraiser?  

Perhaps the appraiser doesn’t know the sub-market, or that you rehabbed the property, or is generally just not trained on how to count (I’m serious!) or to pull comps (even more serious!). It happens!  

Just last year on one of my BRRRR refinances, I’m absolutely positive the appraiser never visited the property. We rehabbed the property from a three-bed, one-bath, 1,000-square-foot home to a four-bed, two-bath 1,300-square-foot home.  

Drumroll, please… 

The appraisal came in just $5K over what we had purchased the original distressed property for ($30K under market).

Guess what?! The appraiser counted only three beds, one bath, and 1,000 square feet, AND they only included the data from the original sale, including the old pics! Clearly, he had never visited the property and/or the comps!

I’ve always been amazed that an appraiser can miscount the number of rooms, bathrooms, and square footage and still stick by their report. Yet, this jackal stuck by his report.  

And if you know me at all… I don’t take “no” for an answer!

So, what can you do if you get a rotten, no-good appraisal report that threatens your deal?  

Related: What Yields a Higher Return: Selling Now, Selling in a Few Years, or Refinancing?

How to Deal With a Bad Appraisal

First step… BREATHE!  


  1. Contest the report with the lender. You can appeal why you think the home should be evaluated differently. The appraiser then has the opportunity to correct their report and make justified adjustments to value. Unless there is a glaring issue, the appraiser will own up to, this maneuver might pull the value up $5-10K.
  2. Request that the lender not use that specific appraiser again. To avoid the bad lending practices of 2008-2010, lenders have to use an appraiser from a network. While you can’t request a specific appraiser, you can ask for one to not appraise your properties again.
  3. Start the process over. You can wait the allotted time (typically six months) and start the refinance process over again.
  4. Bring cash. You can also bring extra funds to close the transaction and try refinancing the property again at a later time.

If you can’t resolve the bad appraisal by contesting, all is not lost. You have two more maneuvers to execute:

  1. You can switch conventional lenders. The new lender may still have a waiting period, but hopefully much shorter than six months. Make sure you have enough time with any hard money or private money lender to do that.
  2. You can also consider going commercial lending or local portfolio lending. Since rates will be higher, make sure your numbers still work for you to go that route.


There are clear action steps, within your control, that you can take to ensure your BRRRR refinance goes smoothly. And while you can’t control the entire refinance transaction, you are now empowered with ways to deal with most BRRRR refinance situations.


Would you like me to expand on any of the above? Do you have any additional advice to offer investors looking to refinance?

Let’s talk in the comment section below.

Whitney is a real estate investor and personal finance trainer whose vision is to launch 10,000 families on the path toward financial independence. After purchasing her first rental in 2002, and hi...
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    Larry Russell Rental Property Investor from Whitsett, NC
    Replied about 1 year ago
    The refinancing is the most challenging and stressful part of the entire BRRRR process.. I've recently purchased several properties, so I'm looking to place at least 3 of them in a single commercial loan. I've done it in the past without a problem because one of them was strong enough to carry the entire loan. This time, I need each of the 3 properties to appraise for a certain amount in order to get enough of my cash back so I can repeat the process. Thanks for writing on this subject.
    Micki Sluyter Investor from Pinedale, Wyoming
    Replied about 1 year ago
    When you refinance using commercial do you have an easier time qualifying compared to conventional residential?
    Whitney Hutten Rental Property Investor from Boulder, CO
    Replied about 1 year ago
    It really depends. But the underwriting is less on you, and more on the business model of the property.
    Denise Brown-Puryear from Julian, North Carolina
    Replied about 1 year ago
    Great topic! I'm just completing a purchase refi with cash out. We're using the cash out to renovate a duplex we purchased for cash (@ $20K) ARV 80K in a growing and redeveloping area. It's a fantastic way to build up your portfolio and once we finish with our last 2 rehabs, I'm looking to refi a high value property in NY to purchase a portfolio or up to 30 unit property. Can't wait to hear more from you! Thanks.
    Whitney Hutten Rental Property Investor from Boulder, CO
    Replied about 1 year ago
    Go, Denise!
    Michael Doherty Real Estate Agent from Hartford
    Replied about 1 year ago
    Very timely post and accurate at that. I recently purchased and rehabbed a duplex. The ARV came in at 218k. 3 months later the ARV came in at 201k.... Nothing had changed (for the worse) during those 3 months other than the appraisers estimated market value. My lender would not budge from 75-80% ltv and would not order another appraisal nor did the appraiser change his estimate after my appeal. Long story short- I changed lenders 2 days before the original cash out refi and ordered a new appraisal. Should be receiving that today or tomorrow- fingers crossed! The appraisal process is literally the only step of the process out of your control. The fact that it is still done by a human and not a systematized on a computer in 2019 is beyond me.
    Asha Olivia
    Replied 26 days ago
    How did changing the lenders work out for you?
    Whitney Hutten Rental Property Investor from Boulder, CO
    Replied about 1 year ago
    So true! I just had one come back TODAY way under. Guess what?! They miscounted the square feet, forgot the garage, and second bath. We will be contesting :)
    Travis Shelton Real Estate Agent from Scottsdale, Arizona
    Replied about 1 year ago
    One thing not mentioned that I personally did was after contesting the first appraisal (and nothing was changed), the financial institute offered that I could use another company for another appraisal but would have to cover that additional fee as well. Things worked out and got the appropriate appraisal the second time. It did cost me the extra $400-500 cost but in the end was WELL WORTH IT! The first appraisal used a completely different houses pictures in the appraisal, did not count a huge loft I had and mentioned he only did appraising part time and mine was the first he had done in a few months (he was a snowbird!) Ridiculous these are the professionals that can make or break deals.
    Whitney Hutten Rental Property Investor from Boulder, CO
    Replied about 1 year ago
    Good point, Travis. That often time is dependent on the type of lender you are using. But if you can get around seasoning requirements... why not!
    Anthony Jeffers from Jersey City, New Jersey
    Replied about 1 year ago
    So if one was to do the brrrr strategy on let’s say, a 5 to 10 unit property, being that the lender considers this commercial property and therefore determines the appraised value based on the NOI and cap rate, this would greatly reduce the risk of getting a crappy appraisal, correct?
    Paresh Patel
    Replied about 1 year ago
    We have total of 6 investment properties (4 with individual loans) 2 free and clear. How can I combine 4 properties under one loan, cash out and invest the proceeds in buying more properties. Properties are in DuPage county, IL. Thank you, in advance for input and he;p
    Asha Olivia
    Replied 26 days ago
    I believe you can do this with a portfolio lender!
    John Kennedy Rental Property Investor from Indianapolis, IN
    Replied about 1 year ago
    The appraisal process is hands down the most frustrating part of a BRRRR project. Bad appraisals (at least in our opinion) seem to be way too common, unfortunately. One thing that has worked somewhat well for me is to meet the appraiser on site armed with data including favorable comps I'm aware of and even my rehab scope summary and cost info to back it up. I might even manage to mention a target $ amount in the course of the conversation! On the other hand (if I'm being honest) I realize my due diligence at the front end of the project - when I over-optimistically determine the ARV - is probably where my biggest problem lies!
    Whitney Hutten Rental Property Investor from Boulder, CO
    Replied about 1 year ago
    Very true, John. You have to be conservative (and still cross your fingers a bit!) :)
    John Murray from Portland, Oregon
    Replied about 1 year ago
    I have BRRRR a bunch of RI properties. The key is to purchase 20-30% below market and renovate (sweat equity) within 60-90 days, rent and wait about 1 year for the loan to season. The market must be in an uptick to maximize the monies. My trigger point is $50K clear. I'm selling off my holdings and bracing for a sell down in the next decade. The millennial generation will have to deal with the next sell down, I'm going to Hawaii.
    Joe Hartman Wholesaler from Nottingham, Maryland
    Replied about 1 year ago
    Meet the appraiser there. Make sure they show up and as previous remarks mentioned - come with ammo. No puns intended. Joe
    Dave Rav from Summerville, SC
    Replied about 1 year ago
    @Joe Hartman, do we know if they are required to visit the property according to the licensing requirements?
    Whitney Hutten Rental Property Investor from Boulder, CO
    Replied about 1 year ago
    Absolutely! If you can (I live about 1000 miles from my properties).
    Dave Rav from Summerville, SC
    Replied about 1 year ago
    I would add in, regarding Appraisers not doing their job (and completing inaccurate reports that have profound effects on deals), accountability is important. Bring it to their attention that they did NOT visit the property, or take into account your repairs. If they fight it (at this point, they're basically trying to knowingly support their erroneous information), I would strongly consider reporting them to the Board responsible for their licensure. You are paying for a service (and in some cases, exorbitant amounts of money). There are standards to this service. One of which is actually assessing the property and seeing it in it latest state and condition. If I'm going to pay someone $500 or more, least they can do is visit the darn property!
    Hao Liu Real Estate Investor from Oklahoma City, Oklahoma
    Replied 11 months ago
    Whitney, this is the best BP blogs I've read so far! And I've read a ton. Thanks
    Whitney Hutten Rental Property Investor from Boulder, CO
    Replied 11 months ago
    You are most welcome, Hao. Thank you very much :)
    Ken B. from yucca valley, ca
    Replied 4 months ago
    @ Whiney Hutten, Would really like to read all your BRRRR posts. Your posts are excellent and will really help me in Maine. Thank You so much! Respectfully, Ken Bailey
    Whitney Hutten Rental Property Investor from Boulder, CO
    Replied 4 months ago
    I glad you are finding value, Ken!