New to Real Estate · Louisville, KY · Member since 2024 · 11 posts · 12 votes
In the BRRRR strategy, you refinance after you've rehabbed and rented that property out. You pay back the bank and I assume you then own that property without mortgage. Is that correct ? or is it that the refinancing has to cover the down payment and you still have a mortgage.
Hinton, WV · Member since 2026 · 132 posts · 40 votes
1mo
it's a common misunderstanding that you pay off the whole loan and own it free and clear with brrrr.
when you refinance, you're usually getting a new mortgage, often a cash-out refinance. this new loan pays off the initial hard money or private loan you used to buy and fix up the property, and ideally, returns your down payment and rehab costs back to you.
you don't end up with the property free of a mortgage. instead, you have a long-term loan on it, and the goal is to pull your capital out so you can go do another deal, leaving little to no money of your own still in that property.
have you started looking at lenders for the refinance part yet, or are you still in the acquisition stage?
New to Real Estate · Louisville, KY · Member since 2024 · 11 posts · 12 votes
1mo
Okay, the refinance pays off the original loan whether it was DSCR or hard money loan. I would still have a new mortgage and whatever is leftover is what I use to repeat the process.
I have a lender and a realtor from the first investment property I bought two years ago, I've just discovered the BRRRR strategy and I'm in the stages of learning the ins and outs of it before I execute it.
Lender · Pickerington, OH · Member since 2026 · 49 posts · 39 votes
1mo
Not quite! The refinance usually pays off the original purchase/rehab loan, but it replaces it with a new long-term mortgage.
The goal with BRRRR is to create enough equity through the rehab that the refinance lets you pull back out some or ideally all of the cash you originally put into the deal.
So for example, you might buy for $100k, put $30k into rehab, then the property appraises for $200k. If you can refinance at 75% LTV, that’s a $150k new loan. You’d use that to pay off whatever you borrowed for the purchase/rehab and potentially get your original cash back out.
You still have a mortgage on the rental after the refinance. The “magic” of BRRRR is getting your cash back so you can use it on the next property while keeping the first property as a cash-flowing rental.