Your next BRRRR deal starts with the refinance.
Begin with the exit
A discounted purchase is only one part of a BRRRR deal. Before you sign, ask whether the finished property can qualify for a long-term rental loan. Property type, location, condition, credit, rental income, and your ownership history can all change the answer.
Work backward from a conservative value
At an illustrative $310,000 completed value and 75% refinance LTV, gross refinance proceeds are $232,500. A $180,000 purchase plus $45,000 renovation costs $225,000 before financing, holding, and transaction costs. That leaves just $7,500 above base project cost before those additional expenses. Returning every dollar is not assured.
Test the downside before you buy
If the appraisal is 10% lower, value falls to $279,000 and a 75% refinance produces $209,250. The same property may still be worth holding, but your capital plan changes. Also test rent 10% lower and a higher interest rate.
Questions for your financing conversation
Ask about eligible value, seasoning, cash-out limits, lease requirements, reserves, and prepayment penalties. Align the bridge maturity with a realistic renovation and lease-up schedule. Obtain lender-specific guidance before relying on a refinance.