Real Estate Investor Financing Guide

BRRRR investing requires two different types of financing, used at two different phases of the deal. Getting this wrong — using the wrong product at the wrong time, or failing to plan the transition between them — is one of the most common ways investors get trapped with capital stuck in a property.

The Two-Loan Structure

Every BRRRR deal follows the same financing pattern:

1. Short-term acquisition loan (hard money or private money) — funds the purchase and rehab. High interest (10-14%), short term (12-18 months), fast closing. You are paying for speed and flexibility, not long-term cost efficiency. Hard money deep dive →
2. Long-term refinance loan(DSCR or conventional) — replaces the hard money with a 30-year mortgage based on the property's new appraised value. The refinance proceeds pay off the hard money loan and (ideally) return your cash. DSCR loans deep dive →

Why DSCR Over Conventional

Conventional investment property loans work for the first few properties. But they require full income documentation, have a 10-property cap per borrower, and underwriting takes 30-45 days. DSCR loans qualify on the property's rental income alone — no tax returns, no W-2s, no property count limits. For investors scaling past 3-4 properties, DSCR becomes the only practical refinance option. See DSCR and bridge loan options from Kiavi

The Cost of Getting It Wrong

The gap between your hard money rate and your DSCR rate is the cost of the BRRRR transition. Every month you hold the hard money loan beyond plan is money lost. Common mistakes:

• Rehab runs long — carrying costs at 12% add up fast
• Seasoning requirements force you to hold the hard money loan longer than expected. Seasoning explained →
• DSCR comes in too low at refinance — lender caps LTV or declines the loan
• Appraisal misses ARV target — refinance proceeds don't cover the hard money payoff. ARV estimation →

Model It Before You Commit

The Rabbyt calculator models both financing phases — hard money carrying costs through rehab, then DSCR refinance at your projected terms. It shows you the total cost of capital and what happens if the timeline stretches.

Deep Dives