Definition
The refinance step in BRRRR extracts equity based on the completed renovation value. Success requires property cash flow supporting refinance loans.
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After renovation, refinance extracts equity based on new property value. Successful refinance recovers most/all initial investment. Property must support cash-out refinance through positive cash flow (DSCR > 1.25). Refinance timing is critical.
Pro Tip
Ensure property cash flow supports refinance requirements before committing to BRRRR.
Example
Property renovated from $100k purchase to $180k value; refinance 80% = $144k proceeds vs. $130k invested; $14k profit to recycle