BRRRR, short for buy, rehab, rent, refinance, repeat, lets investors recycle the same cash into deal after deal. The refinance step is what makes it work, and a DSCR cash-out loan is the most common way to do it: no tax returns, no W-2s, and a loan sized on the property's new value and rent.
How the DSCR Cash-Out Refinance Works
Once the rehab is finished and the property is rented, a DSCR lender orders a new appraisal. The new loan is based on the property's new appraised value after the rehab (often called ARV), not just what you paid for it, once you meet the lender's seasoning rules. The proceeds pay off your hard money or private loan, and any extra comes back to you.
Example: purchase price $190,000 plus $45,000 of rehab, $235,000 total. After-repair appraisal: $320,000. At 75% LTV, the new loan is $240,000. It pays off a $215,000 hard money balance and returns about $25,000 before closing costs, with a 30-year loan replacing the short-term debt.
Cash-Out Refinance Requirements
| Guideline | Typical | Strongest files, at some lenders |
|---|---|---|
| Credit score | 660–680 | From about 640 |
| Max LTV, cash-out | 70–75% | Up to 80% with 720+ |
| DSCR | 1.00x | Lower with some programs, at lower LTV |
| Seasoning for new value | 6 months | 3 months or less at a few |
| Tenant | Signed lease | Vacant allowed at some, with tighter terms |
| Reserves | 2–6 months | Cash-out proceeds count at some |
| Cash in hand | Often capped around $500K–$1M at higher LTVs | Unlimited at lower LTVs at some |
Seasoning, Explained
Seasoning is how long you must own the property before a lender will lend against the new appraised value instead of your purchase price.
- Under 6 months: many lenders cap the loan at your purchase price plus documented rehab. A few will use the new value sooner.
- 6 months: the most common standard, with the most lender options.
- 12 months: required by stricter lenders, or for some credit profiles.
At most lenders the clock starts when you closed on the purchase, not when the rehab finished. Plan your hard money term around it.
Delayed Financing for Cash Buyers
If you bought with cash, delayed financing lets you refinance soon after purchase, often right away, without waiting out seasoning. The loan is usually limited to your documented purchase price plus eligible costs, and you'll need to show where the cash came from.
The Lease
Most lenders want a signed lease on a refinance. Some will refinance a vacant property using the appraiser's market rent, usually with tighter terms, such as a 700 score, a 1.15x DSCR, a lower LTV, and extra reserves. Getting the tenant in place first gives you the most options.
Timing Your Refinance
- Choose hard money with enough term and an extension option to reach your lender's seasoning.
- Finish the rehab and get the lease signed.
- Gather receipts and photos of the work to support the appraisal.
- Apply for the DSCR refinance as soon as the lease is signed.
Still deciding between short-term and long-term financing? See DSCR vs. hard money. For cash-out on a rental you already own, see cash-out refinance on an investment property.
Cash-Out Refinance vs. Selling
Refinancing keeps the property and its appreciation, and loan proceeds generally aren't taxed as income. Selling locks in the gain but triggers taxes and ends the cash flow. Many investors refinance to recycle capital and sell selectively. Talk to your tax advisor about your situation.
BRRRR Refinance FAQ
How soon can I do a cash-out refinance after buying?
Most lenders want six months of ownership to use the new appraised value. Some accept less, and delayed financing can work immediately for cash purchases, up to your cost.
Can I refinance a vacant property?
Some lenders allow it using market rent, usually with a higher credit score, a higher DSCR, a lower LTV, and more reserves.
How much cash can I take out?
Usually up to 70–75% of the appraised value minus what you owe. Some lenders cap the cash in hand at higher LTVs.
In the financial industry since 2015. Licensed loan officer in Los Angeles, California. NMLS #1493724, with UTM Financial, LLC (NMLS #2591548). More about Ivan
This article is general education, not financial, tax, or legal advice. Loan guidelines vary by lender and change often. Not a commitment to lend.