Most of the volume we’ve funded over the last year has been some version of BRRRR: buy, rehab, rent, refinance, repeat. It’s the strategy that holds up best in a flat market, because you’re not betting on appreciation to bail you out at sale. You’re building a rental that pays for itself and pulling your capital back out to do it again.
The part that trips operators up isn’t the strategy. It’s the financing. BRRRR isn’t one loan. It’s two, and they have to hand off cleanly. Here’s how it actually works in Ohio.
BRRRR is a two-loan strategy
The mistake is thinking of BRRRR as a single deal. It’s two financing events stitched together:
The short-term loan covers the buy and the rehab. This is hard money: a bridge or fix & flip loan that funds the acquisition and the renovation, fast, on the strength of the property instead of your tax returns.
The long-term loan pays off the short-term loan once the property is rented. This is a DSCR refinance that qualifies on the rent, not your income, and lets you hold the property for the long haul.
Get both halves right and the strategy hums. Get the handoff wrong (usually the refinance) and you’re stuck paying hard money interest on a property you meant to hold. Most of what goes wrong in BRRRR is a financing problem, not a property problem.
Half one: buying and rehabbing with short-term capital
The first loan does two jobs: it gets you the property and it funds the work. We lend up to 90% of the purchase cost plus your rehab, interest-only, on a 6 to 12 month term, and we underwrite the deal (the as-is value, the rehab scope, and the after-repair value), not your W-2s.
Leverage is the whole point. The more of your own cash you keep in your pocket on the buy and rehab, the more you have left to repeat. But higher leverage only works if the refinance can actually pay off the short-term loan, which we’ll get to. We funded a Lorain single-family at 91% LTC that refinanced into a DSCR loan three months later. That’s the pattern when it lines up.
The rehab comes in draws. We don’t hand you the full rehab budget at closing. We hold it back and release it in stages as work gets done and inspected. You front each stage and get reimbursed. It keeps everyone honest and it keeps you disciplined on scope. If you’re new to construction draws, plan for it: you’re advancing your own money before each reimbursement.
Interest-only keeps the carry low. While the property is being renovated and leased, you’re paying interest only, which keeps your monthly cost down during the months it isn’t producing income yet. And there’s no prepayment penalty, so the day your refinance is ready, you pay us off. Not a dollar more for moving fast.
Half two: renting and refinancing into a DSCR loan
Once the rehab is done and the property is leased, you refinance out of the short-term loan into long-term financing. For a buy-and-hold, that’s almost always a DSCR loan.
One thing to be straight about: we don’t underwrite DSCR loans directly. DSCR is a partner program for us. We connect you with lenders in our network who do long-term rental financing, and we help you through the handoff so the refinance is lined up before you need it, not scrambled for in month nine.
DSCR qualifies on the rent, not on you. Instead of your personal income, a DSCR lender looks at whether the property’s rent covers its debt. A debt service coverage ratio above 1.0 means the property pays for itself. Most lenders want to see 1.1 or better, and the stronger that number, the better your terms. The property qualifies itself, which is exactly why this works for investors who don’t have clean W-2 income.
Seasoning. Most DSCR lenders want the property leased and “seasoned” for three to six months before they’ll refinance at the new, higher appraised value. Build that window into your plan. Your short-term loan term should comfortably cover the rehab, the lease-up, and the seasoning, with room to spare.
Where BRRRR deals go wrong
We see the same handful of mistakes, and they’re almost all on the refinance side.
The rent doesn’t support the refi. The single most common BRRRR failure. The operator nails the buy and the rehab, then finds out the market rent only supports a DSCR of 0.9, and the refinance they were counting on to pull their cash back out doesn’t come through at the leverage they assumed. Run the refinance math before you buy, not after. If the rent doesn’t cover the long-term debt at the value you’re expecting, it’s not a BRRRR. It’s a flip you haven’t admitted to yet.
The rehab budget was soft. An itemized rehab budget with a contingency line is the difference between a project that seasons on schedule and one that runs out of money in month three. We catch soft budgets in underwriting. Bring a real one.
No DSCR lender lined up. Operators who wait until month five to start shopping the refinance are the ones whose timeline slips into month nine while the hard money interest keeps running. Line up the exit at the start. That’s exactly what our partner handoff is for.
Over-leveraged on the buy. If you stretch leverage on the short-term loan but the refinance can only pull out 75% of the new value, you can end up bringing cash to the closing table just to pay off the bridge. That’s the opposite of what BRRRR is supposed to do. The two loans have to line up.
What makes a BRRRR fundable
The deals we fund fast and the deals that refinance clean share the same four traits.
The rehab is itemized and honest. Real scope, market pricing, a contingency line. Not “rehab budget $35K” as a single line.
The ARV is defensible. Three comps within a half-mile, similar finish, sold in the last 90 days. Not aspirational numbers from a better neighborhood.
The rent is real. Actual rent comps for the finished product that support a DSCR above 1.1 at the loan amount you’ll need on the refinance.
The exit is lined up. A DSCR refinance you’ve already talked through, not one you’ll go find in month five.
The short version
BRRRR works in Ohio right now because it doesn’t depend on appreciation. But it only works if both loans line up: short-term capital to buy and rehab at leverage that keeps your cash working, and a DSCR refinance the rent can actually support. Get the refinance math right before you buy, and the rest of the strategy takes care of itself.
If you’ve got a BRRRR you’re working in Ohio, send it to us. We’ll fund the buy and rehab, line up the DSCR exit through our partners, and help you through both sides of the handoff.