The BRRRR strategy (Buy, Rehab, Rent, Refinance, Repeat) has become a go-to model for real estate investors looking to build long-term wealth. But the real fuel behind this powerful strategy? The right financing.
If you’re working with traditional loans, you may encounter roadblocks such as slow approvals, restrictive income requirements, or a lack of flexibility. That’s where First Equity Funding comes in. With tailored Bridge Loans and DSCR (Debt Service Coverage Ratio) Loans, investors can move quickly and scale efficiently. Let’s break down how you can use these two loan types to unlock the full potential of your BRRRR game plan.
What Is the BRRRR Strategy?
The BRRRR method is designed to help investors build passive income streams while recycling capital. Here’s a breakdown:
- Buy: Purchase undervalued property, usually distressed or off-market.
- Rehab: Renovate to increase property value and rentability.
- Rent: Secure a tenant and start generating monthly income.
- Refinance: Pull out equity based on the new appraised value.
- Repeat: Use those funds to buy your next investment property.
The key to making this work smoothly is having funding that aligns with each phase of the project.
The Right Loans for Each BRRRR Phase
Step 1 & 2: Buy and Rehab – Bridge Loans
Bridge loans are short-term financing options that are perfect for acquiring and rehabbing properties quickly.
Why Use Bridge Loans?
- Speed: Close deals in days, not weeks.
- No Income Verification: Focuses on asset value rather than borrower income.
- Rehab-Friendly: Funds can cover both purchase and renovation costs.
Bridge loans are short-term loans designed to help you quickly secure funding for a property purchase, especially when time is critical. If you come across opportunities like foreclosures or off-market properties, which often require immediate action, a bridge loan ensures you have the necessary funds without waiting for lengthy bank approval processes. This allows you to act swiftly and avoid missing out on valuable deals.
“Bridge loans let you act fast when the right deal comes up. Whether it’s a foreclosure or an off-market gem, you won’t miss out because of slow bank approvals.”
Explore our Fix & Flip Bridge Loans to learn how they fit into your early BRRRR phases.
Step 3: Rent – Build a Cash-Flow Foundation
Once the rehab is complete, it’s time to rent the property. This phase isn’t just about generating income; it’s critical for refinancing.
Why It Matters:
- Your rental income becomes the foundation of your DSCR.
- Stable tenants and market-aligned rent increase your chances of qualifying for better refinancing terms.
Pro Tip: Secure long-term leases with qualified tenants to create predictable income for future lenders.
Step 4: Refinance – DSCR Loans
When your property is stabilized and generating cash flow, you can refinance into a DSCR loan, which is specifically tailored for rental property investors.
Benefits of DSCR Loans:
- No W-2s or Tax Returns: Approval is based on the property’s income.
- Cash-Out Options: Pull out the equity to fund your next deal.
- Fast Closings: No more waiting 60 days to refinance.
“If your rental income covers the mortgage, you’re likely eligible. DSCR loans keep you scaling without hitting traditional lending walls.”
Learn more about our DSCR rental loan programs.
Step 5: Repeat – Scale Smarter
With the refinance complete, you now have cash in hand to repeat the process. Each cycle should get more efficient as you build a portfolio and lender relationships.
How to Maximize This Phase:
- Work with lenders that understand your long-term goals.
- Reinvest with speed using pre-approvals or funding pipelines.
- Track performance across properties to secure better loan terms.
“Momentum is key. DSCR and Bridge Loans help you ride the wave without getting stuck between deals.”
Common Mistakes to Avoid in BRRRR Financing
- Using the wrong lender: Not all lenders understand real estate investing. Associate with specialists who know how to structure deals for BRRRR success.
- Not budgeting for rehab correctly: Underestimating costs can delay your refinance timeline and eat into your ROI.
- Overleveraging: Ensure the numbers work at each stage. A bad tenant or low appraisal can slow your cycle.
Why First Equity Funding?
We’re not just a lender, we’re your growth partner. With flexible programs, in-house underwriting, and a team that understands your strategy, we help you:
- Close quickly on acquisitions
- Fund rehabs with ease
- Refinance fast without personal income checks
“Our goal is to help you scale faster, smarter, and with less friction.”
Final Thoughts
The BRRRR method works, but only if your financing does too. With First Equity Funding’s Bridge Loans and DSCR Rental Loans, you’re not just funding a deal; you’re building a system to grow long-term wealth.
Ready to power your next BRRRR project? Contact First Equity Funding today to talk with our lending team.