How I finance the next deal while the last one is in rehab

Question

I run 236 properties in Memphis, all BRRRR single-family. The pipeline never stops, and here's the simple reason: deal flow is my bottleneck, not capital, not contractors, not the team. While one house is in rehab, I'm already sourcing and underwriting the next one. I buy single-family under $100K in 38109, 38111, 38112, 38114, 38116, 38117, 38118, 38122, 38128. I underwrite to the 1% rule — if it won't rent for at least 1% of all-in, I pass. Target ARV is $180K to $265K. The rehab is where I build the rent. I convert 2/1s to 3/1s and 3/1s to 4/2s, turning carports and garages into master beds and baths. A 3BR+ Section 8 house rents for $1,395 to $1,950 here, and that rent is what carries the refi. When the last house stabilizes, I refinance with a DSCR loan at 70-80% LTV on a roughly 30-year amortization. Those refi proceeds fund the next buy. I never put earnest money down, and I don't wait for one deal to be perfect before lining up the next one. Buy under $100K, force the ARV, rent it right, refi, repeat. The money recycles if the numbers work on day one. For those of you running BRRRR at any scale — what is your actual bottleneck right now, deal flow, capital, or contractors, and how are you financing the next deal while the last one is still in rehab?

James Jones · Answer

Appreciate it, Matthew — the boring version is usually the one that works.

James Jones · Answer

Robin, I've run it one house at a time on purpose. The system only works if the capital keeps moving: a house stabilizes, it refinances on a DSCR loan at 70 to 80% LTV on a 30-year amortization, and that money funds the next purchase while another rehab is still running. A batch refi makes the finished houses wait on the slowest one, and waiting is the one cost my model won't carry — deal flow is my bottleneck, not capital, so nothing can sit idle. One loan per house also keeps the math clean: that house's rent, that house's ARV of $180K to $265K, that house's payment. If one underperforms, it underperforms alone. Two hundred thirty-six doors got built by repeating one clean deal, not by packaging them.

Ametria Chaney · Answer

James, I'll answer from the deal-flow side of the table, since I watch your exact buy box move through Memphis as an agent. For the investors I work with, the bottleneck is almost never capital — it's what you said, deal flow, specifically off-market flow that never touches the MLS. The buyers getting the under-$100K houses are the ones who hear about them before the listing photos exist, and that almost always comes through relationships with agents and wholesalers who know their box. One financing-adjacent point from my seat: the investors who keep the pipeline moving are the ones who are easy to close with — proof of funds ready, short inspection windows, no retrading. Sellers and listing agents remember who actually closes, and that reputation becomes deal flow of its own. Love seeing the real Memphis numbers posted publicly.

Adam Summerer · Answer

Robin covered the seasoning side. One thing to add for anyone copying this with cash buys: a lot of DSCR lenders will do delayed financing before the 6 month mark, but it gets capped at what you can document, purchase plus rehab, so the rehab needs a real paper trail (invoices, draw records, bank statements). Cash paid to a crew with no receipts basically counts as zero. And a hard money purchase usually isnt treated as a cash purchase for that, so it only helps if you actually bought it with cash.

Matthew Morrow · Answer

@James Jones interesting to see how you run it at that scale. Deal flow being the bottleneck rings true for me too, even at a much smaller size. Most of my early deals came from going straight to owners with letters, calls, and walking the neighborhood, so the next conversation was usually going while a rehab was underway. The equity from each refi carried into the next one. Thanks for laying out how you do it.

Nathan Shelby · Answer

I feel like my biggest constraint right now is the tipping point. I self manages 13 doors in North Ms. Decent cash flow, great equity, but I can’t find where to jump in to next. Listed prices don’t pencil and I can’t nail down the right thing to throw capital at to grow.

Eric Kleinsasser · Answer

Nathan, 13 doors plus five new builds in one year is a lot to have going at once. If listed prices don't pencil, building already looks like your edge, so I'd lean into that instead of shopping the list. Once you know your real all-in cost per house (land, sitework, the build, interest on draws, carrying until it's rented), you can tell a lot seller or landowner exactly what you can pay and still have it work. I came out of construction, and the builders I saw grow were the ones who knew that number cold. Do you have this year's five builds pulled together in one place yet, or is it spread across the lender draws and receipts?

Robin Simon · Answer

Hi James - love seeing BRRRR run at that kind of scale in Memphis! One thing I would say from the lending side is that the refi timing can be a bigger bottleneck than people realize, a lot of DSCR Lenders will hold you to the lower of what you have into it vs the appraisal until you've been on title ~6 months, but theres a few that will use the new appraised value after 3 months and even one or two that will use it from day one, which can really speed up how fast that capital recycles. The other thing to watch at your price points is loan size - once you're under ~$150k some lenders cap refis at 65% LTV and want a 1.25x DSCR, so on the lower ARV houses its worth shopping that specifically. At 236 doors have you looked at bundling a batch of the stabilized ones into a portfolio/blanket refi vs doing them one at a time?

James Jones · Answer

Nathan, you're describing my bottleneck exactly — it's deal flow, not capital. Listed prices in Memphis don't pencil for me either, so I quit shopping the list. My deals come from wholesalers and repeat sellers who know my box: single-family under $100K in my nine ZIP codes, rent that clears the 1% rule, ARV $180K to $265K after rehab. When your box is that specific, sellers and wholesalers bring you the right houses instead of you chasing every listing. With 13 doors and self-managing, you've got the operations handled. Point that same energy at sourcing for a month and watch what shows up.

Muyees Ayilara · Answer

@James Jones Respect on 236 doors in Memphis all single family BRRRR. That line about deal flow being the bottleneck not capital is exactly what I am seeing in Boynton Beach FL on smaller scale.

I run townhouse and duplex in Delray and Boynton. I buy $250K to $500K small box. Target is $242K purchase plus $60K rehab equals $302K all in, ARV $420K to $480K, 20 percent plus margin. I do not have Memphis $100K entry, so my version of your 1 percent rule is DSCR at 1.2x after 5 percent vacancy haircut. Same idea, different market.

What helped me finance the next while last is in rehab:

I lock DSCR takeout early. When house goes under rehab I already have rent comps leased in last 6 months within half mile and insurance and tax bill marked paid in full. Lender does not wait for final rent. That saves 2 weeks.

I keep earnest to zero or $500 max like you. I line up next deal with inspection period only. If last rehab goes over by $10K I still have liquidity for next down. My hard stop is 65 percent ARV all in. If it goes over I walk.

For conversion, I saw your carport to master bed and bath. In FL we do same with garages in Bexley Park and Monarch Lakes. Adds $200 to $300 rent but county wants permit. Do you pull permit for your garage conversions in Shelby County or keep it as non permitted bonus?

Quick question for you at your scale. When you refi 70 to 80 percent LTV on 30 year, are you using same DSCR lender for all 236 or do you rotate lenders to avoid concentration? And what is your filter to say no to a $90K house that looks like a deal but will not rent for $1,395?

Appreciate you posting real numbers. The buy under $100K force the ARV rent it right refi repeat is the cleanest summary of BRRRR I have seen.

How I finance the next deal while the last one is in rehab

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