Question for BRRRR / Buy &amp; Hold Investors

Alfath AhmedBusiness Member

Real Estate Agent · Columbus, OH · Member since 2022 · 1k+ posts · 1k+ votes

[email protected]614-802-5698

Quote from @Shakur Granger:

I've been studying different BRRRR exits, and I'm noticing something I want to get some feedback on from people actually running the numbers in today's market.

Here in North Carolina especially the Triad and Charlotte suburbs I'm seeing most BRRRR investors target a 70–75% LTV on their refis just to keep DSCR solid. A lot of DSCR lenders around here are coming in around 1.15–1.20 minimum, which means anything close to 80% LTV starts to get tight unless the rents are really strong.

For example, I ran numbers on a small duplex near High Point:

Purchase: $128,000

Rehab: $22,000

All-in: $150,000

ARV: ~$200,000 (based on clean comps)

Rents: $950–$1,000 per door is typical right now

DSCR lenders are quoting: 7.5–7.9% rates with taxes/insurance baked in

At 75% LTV, the refi comes out close to $150K basically pulling out most of the capital.

At 80% LTV, the cash-out jumps but the DSCR drops just under 1.15, which some lenders won't allow.

My question is:

For those actively doing BRRRRs in 2024–25, what LTV are you comfortably targeting on your refi? And are you finding lenders are still strict on DSCR, or are any of you getting flexibility if the deal is strong?

I want to compare what I’m seeing locally with what others are experiencing in different markets.

I own 28 units in my market just doing strictly BRRRR deals and some flips to get capital. I can share my lenders. They have no seasoning and can do 75/25.

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Greg Kasmer

Rental Property Investor · Philadelphia, PA · Member since 2021 · 778 posts · 504 votes

@Shakur Granger - I invest outside of Philadelphia and most credit unions I've worked with offer 75% LTV and the DSCR lenders vary... but 70-75% seems to be the range. If you're pulling out most/all of your capital, then you've got a good deal in today's market. Good Luck!

Steven WeidlerPro Member
Member since 2025 · 38 posts · 9 votes
9mo
Quote from @Greg Kasmer:

@Shakur Granger - I invest outside of Philadelphia and most credit unions I've worked with offer 75% LTV and the DSCR lenders vary... but 70-75% seems to be the range. If you're pulling out most/all of your capital, then you've got a good deal in today's market. Good Luck!

Hello Greg, Steve in South Jersey. shooting you a message now to connect.
0 Reply

Andrew PostellPro Member

Lender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes

@Shakur Granger you have some good comments above but I would also like to expand on something else here. So, yes, you can find lenders that will lend at 1.00 ratio (and below). Do not worry, they are out there and as mentioned above, we are all open to helping you find them.

Now, to expand on something: cash flow is NOT the most important piece of the equation. And I’m going to show you why. First, some historical perspective.

If you have been investing in the past 10 years the current environment is VERY foreign to you. But for those of us been doing this for longer than 10 years, we’ve seen it before. And if you are “newer” then get used to this environment. It will be here for a while. This occurs every 8-12 years. If you learn from this one, you’ll be better prepared for the next one. This is where we make our money. Pre-Housing Crises (pre-2008) interest rates for investment properties were 6.5%-7%. Cashflow wasn’t even part of the discussion. Frankly, neither was the interest rate! Pre-9/11 rates were 7%-8% for investment properties. Everyone knew the score. If you wanted to be a full time investor then you flipped properties. That’s what you did. But if you kept a couple of properties a year, then in the long run you would be very wealthy. Only in the past few years has “cash flow” even been a strategy. But now that prices are so high, interest rates are high, insurance premiums have shot through the roof, etc. many investors are wondering how to make this work. I’ve had people tell me “I’m only buying a property if I cash flow $500 per month”. Ok….I guess I’ll see you in about 5 years? Maybe never? Meanwhile, the rest of us are becoming millionaires while you wait on the sidelines. And at no fault of their own – cashflow is what they were SOLD on.

Here's what I want you to understand about “buy and hold” residential real estate:

Let’s use a single family home with a property value of $300,000
Let’s use an initial loan amount of $240,000
Let’s use an interest rate of 7.25%
And I’m going to give you $150 of cash flow per month
Use a 5% appreciation amount for your property

Let’s see what happens after 5 years:

After 5 years…

$150 of cash flow per month = $9,000
Your mortgage has been paid down to $227,000 = $13,000
Your property is now worth $382,000 = $82,000

So that’s $9,000 of cash flow, $13,000 of principle buy down, and $82,000 of appreciation. We make money in 3 ways with “buy and hold” properties…and cash flow is the smallest piece!

Will you cash flow in this environment currently? No, you will not. At least, I want that to be your expectation. Make your offer a little lower because of it. Also, don’t forget you will increase your rents in year 2, year 3, year 4, etc. So you WILL cashflow eventually but go into the property expecting not to cashflow now. And then you are still going to make $95,000 on a property. Remember Brandon Turner’s article on “How to Make $100,000 per year” – you can read it HERE. Don't forget about it.

If you analyze properties on their "Year 1 Cash Flow" then you are going to miss the boat. Buyer's have all the power now. It's not your fault someone is asking too much for their property! Just adjust your numbers on your offer to account for the difference. Don't miss out on the opportunity that's in front of you.

Hope all of that makes sense. Thanks!

12 Reply

Willy Shumbusho
Columbus, OH · Member since 2025 · 19 posts · 12 votes
9mo
Quote from @Andrew Postell:
@Shakur Granger you have some good comments above but I would also like to expand on something else here. So, yes, you can find lenders that will lend at 1.00 ratio (and below). Do not worry, they are out there and as mentioned above, we are all open to helping you find them.
Now, to expand on something: cash flow is NOT the most important piece of the equation. And I’m going to show you why. First, some historical perspective.

If you have been investing in the past 10 years the current environment is VERY foreign to you. But for those of us been doing this for longer than 10 years, we’ve seen it before. And if you are “newer” then get used to this environment. It will be here for a while. This occurs every 8-12 years. If you learn from this one, you’ll be better prepared for the next one. This is where we make our money. Pre-Housing Crises (pre-2008) interest rates for investment properties were 6.5%-7%. Cashflow wasn’t even part of the discussion. Frankly, neither was the interest rate! Pre-9/11 rates were 7%-8% for investment properties. Everyone knew the score. If you wanted to be a full time investor then you flipped properties. That’s what you did. But if you kept a couple of properties a year, then in the long run you would be very wealthy. Only in the past few years has “cash flow” even been a strategy. But now that prices are so high, interest rates are high, insurance premiums have shot through the roof, etc. many investors are wondering how to make this work. I’ve had people tell me “I’m only buying a property if I cash flow $500 per month”. Ok….I guess I’ll see you in about 5 years? Maybe never? Meanwhile, the rest of us are becoming millionaires while you wait on the sidelines. And at no fault of their own – cashflow is what they were SOLD on.

Here's what I want you to understand about “buy and hold” residential real estate:

Let’s use a single family home with a property value of $300,000
Let’s use an initial loan amount of $240,000
Let’s use an interest rate of 7.25%
And I’m going to give you $150 of cash flow per month
Use a 5% appreciation amount for your property

Let’s see what happens after 5 years:

After 5 years…

$150 of cash flow per month = $9,000
Your mortgage has been paid down to $227,000 = $13,000
Your property is now worth $382,000 = $82,000

So that’s $9,000 of cash flow, $13,000 of principle buy down, and $82,000 of appreciation. We make money in 3 ways with “buy and hold” properties…and cash flow is the smallest piece!

Will you cash flow in this environment currently? No, you will not. At least, I want that to be your expectation. Make your offer a little lower because of it. Also, don’t forget you will increase your rents in year 2, year 3, year 4, etc. So you WILL cashflow eventually but go into the property expecting not to cashflow now. And then you are still going to make $95,000 on a property. Remember Brandon Turner’s article on “How to Make $100,000 per year” – you can read it HERE. Don't forget about it.

If you analyze properties on their "Year 1 Cash Flow" then you are going to miss the boat. Buyer's have all the power now. It's not your fault someone is asking too much for their property! Just adjust your numbers on your offer to account for the difference. Don't miss out on the opportunity that's in front of you.
Hope all of that makes sense. Thanks!
Great perspective on the long-term wealth-building vs. cash flow debate.

One thing I'd add: if you're going to buy properties in a low/negative cash flow environment (which many investors are doing right now), the ACQUISITION becomes even more important.
If you're banking on appreciation and principle paydown rather than immediate cash flow, you need to buy at the right price from the start.
This is where finding motivated sellers matters. If you can buy 15-20% below market from a distressed seller (tax delinquent, pre-foreclosure, etc.), you have built-in equity that protects you even in a flat or down market.

Cash flow might be low in Year 1, but if you bought right, you have options:
- Refinance when rates drop
- Forced appreciation through value-add
- Exit strategy if needed (you bought below market)

The investors I see winning right now are the ones focusing on ACQUISITION quality, not just hold strategy.

@Matthew Banks curious - are you seeing buyers focus more on entry price, or are they still overpaying and hoping for appreciation to save them?
1 Reply

Elealeh Fulmaran

Specialist · Member since 2025 · 483 posts · 270 votes

You're seeing the same thing I am—pushing to 80% LTV often breaks DSCR right now. Two tips: underwrite BRRRRs to work at 70–75% LTV so the refi's a layup, and shop 2–3 DSCR lenders because DSCR minimums and rent-factor assumptions vary more than people think.

What LTV and DSCR are you targeting as your floor on that High Point duplex, and which lenders have you checked so far?

2 Reply

Kenneth GarrettPro Member

Investor · Florida Panhandle/Illinois · Member since 2016 · 4k+ posts · 3k+ votes

Let me add onto what @Andrew Postell stated and he is correct.

Cash flow is important in this game. It's not the only important factor. A few years ago we only wanted cash flow of $500 or greater or we walked. That worked for a long time. Now in today's environment, cash flow is much less. My goal has been reduced when it comes to cash flow. You can also use different rental strategies; MTR, STR co-livi g, etc. I don't think you should buy if it is going to loose money. It needs to have positive cash flow. Enough to cover all of your expenses Including future ones.

The property will increase in value over time, but we should not count on that as that can vary from year to year. I call it a bonus. In the long run your values will increase. I bought a property in 2016 and its value has increased more than 100%. Not bad for ten years. You have to buy right.

Rentals are the long game. The longer you’re in the game the more profitable it becomes.

Tenants paying your mortgage. Tenants reducing your mortgage principle. Tenants paying your property taxes. Rents increase. Cash flow increases.

1 Reply

Willy Shumbusho

Columbus, OH · Member since 2025 · 19 posts · 12 votes

Quote from @Shakur Granger:

I've been studying different BRRRR exits, and I'm noticing something I want to get some feedback on from people actually running the numbers in today's market.

Here in North Carolina especially the Triad and Charlotte suburbs I'm seeing most BRRRR investors target a 70–75% LTV on their refis just to keep DSCR solid. A lot of DSCR lenders around here are coming in around 1.15–1.20 minimum, which means anything close to 80% LTV starts to get tight unless the rents are really strong.

For example, I ran numbers on a small duplex near High Point:

Purchase: $128,000

Rehab: $22,000

All-in: $150,000

ARV: ~$200,000 (based on clean comps)

Rents: $950–$1,000 per door is typical right now

DSCR lenders are quoting: 7.5–7.9% rates with taxes/insurance baked in

At 75% LTV, the refi comes out close to $150K basically pulling out most of the capital.

At 80% LTV, the cash-out jumps but the DSCR drops just under 1.15, which some lenders won't allow.

My question is:

For those actively doing BRRRRs in 2024–25, what LTV are you comfortably targeting on your refi? And are you finding lenders are still strict on DSCR, or are any of you getting flexibility if the deal is strong?

I want to compare what I’m seeing locally with what others are experiencing in different markets.

@Shakur Granger Great breakdown on the DSCR/LTV challenge - I'm seeing similar dynamics in Columbus, OH.

One thing that's helped investors I work with: targeting properties with higher distressed seller motivation upfront, which allows better entry pricing and more room on the ARV spread.

For example, in Columbus:
- Tax delinquent properties (2+ years behind) - sellers often accept 60-70% of ARV just to avoid foreclosure
- This gives you more cushion on the refi math
- Makes hitting that 75% LTV with solid DSCR much easier

The key is finding motivated sellers BEFORE they hit the MLS. Franklin County (Columbus) has 8,500+ tax delinquent properties right now - huge opportunity for BRRRR deals with built-in equity.

Your duplex numbers look solid. If you can find similar deals at deeper discounts on the buy side, the refi math gets way easier even with tight DSCR requirements.

Are you sourcing these deals through MLS or finding off-market opportunities?

Stacy RaskinBusiness Member

Lender · Member since 2022 · 1k+ posts · 511 votes

[email protected]818-770-0340

There are lenders that will allow a DSCR 1 ratio if a 75% LTV for a cash out refinance or an 80% LTV for a purchase depending on the property details. There are rates in the 6s and 7s depending on borrower credit, LTV and other factors. DSCR ratios and program guidelines can vary by lender as they set their own guidelines as a company. The guidelines may be similar between companies but are rarely identical.

More on DSCR rates and guidelines:

Here's a bit more in detail about how rates are calculated for DSCR loans:

1. Credit score- the higher the best. 760-780+ generally gets best pricing for investment property loans with most lenders. From there every 20 point increment affect pricing differently. So for example, a 761 credit score will be in the 760-779 credit category, then going down to 740-759 and so on.

2. Loan to value ratio: The higher the loan to value ratio (LTV) is, pricing takes a hit. So your pricing will be higher for a 80% LTV loan than for a 60% LTV loan.

3. Prepayment penalties- usually 1-5 year terms. The shorter the prepayment term has an impact on increasing the rate.

4. Are you cash flowing the property? More on how that is calculated below. Is your DSCR ratio greater than 1-meaning are you cash flowing (according to the lender's criteria of mortgage, property taxes and insurance (and HOA) if applicable). Many lenders will not do a DSCR loan unless cash flowing. If they will do a loan with less than 1, the pricing takes a hit. This criteria is for 1-4 and 5-8 unit programs.

I've included an example below to help illustrate this.

So different lenders have different rates (which do vary even for DSCR loans) but these are factors they all consider.

See example below:

DSCR < 1

Principal + Interest = $1,700

Taxes = $350, Insurance = $100, Association Dues = $50

Total PITIA = $2200

Rent = $2000

DSCR = Rent/PITIA = 2000/2200 = 0.91

Since the DSCR is 0.91, we know the expenses are greater than the income of the property.

DSCR >1

Principal + Interest = $1,500

Taxes = $250, Insurance = $100, Association Dues = $25

Total PITIA = $1875 Rent = $2300

DSCR = Rent/PITIA = 2300/1875 = 1.23

If a purchase, you also generally need reserves / savings to show you have 3-6 month payments of PITIA (principal / interest (mortgage payment), property taxes and insurance and HOA (if applicable). If a cash out refinance, many lenders will allow the cash out to satisfy the reserves requirement.

DSCR lenders generally let you vest either individually or as an LLC. It's a great way to increase your net worth and these loans can also be used to pull cash out of a property as it appreciates allowing you to reinvest money into new deals.

Happy to connect to discuss further.

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Andrew PostellPro Member

Lender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes

@Willy Shumbusho good stuff Willy. I would also recommend that people should be buying at an even LARGER equity position...30% would be a great place to buy. If you are self-sourcing your deals, this should be your target. If you are relying on others (wholesalers, etc) then 25% is the minimum.

1 Reply

Willy Shumbusho
Columbus, OH · Member since 2025 · 19 posts · 12 votes
9mo
Quote from @Andrew Postell:

@Willy Shumbusho good stuff Willy. I would also recommend that people should be buying at an even LARGER equity position...30% would be a great place to buy. If you are self-sourcing your deals, this should be your target. If you are relying on others (wholesalers, etc) then 25% is the minimum.

@Andrew Postell appreciate that

Totally agree on the 30% equity target for self sourced deals. That buffer makes a huge difference when unexpected rehab costs pop up or if the market softens.
That's actually why I focus on tax delinquent properties , when someone's 3-5 years behind on taxes, they're usually willing to sell at that 30%+ discount just to get out from under it. Much easier to hit those numbers than chasing MLS deals.

Thanks for the insight on the wholesaler vs selfsourced distinction, that's a good framework for people to keep in mind.
1 Reply

Toby LeBoeuf

Member since 2019 · 1 post · 0 votes

75% is pretty standard depending upon your FICO score. If you are looking at 80% you might want to look at a interest only, so you can cashflow.

Denise SuppleeBusiness Member

Realtor · Willow Grove, PA · Member since 2017 · 991 posts · 647 votes