The BRRRR strategy—Buy, Rehab, Rent, Refinance, Repeat—has become a cornerstone strategy for building long-term wealth in real estate. By forcing appreciation through renovation and refinancing the newly created equity, investors can pull their initial capital out and deploy it into the next property. Executing this in California requires tight numbers and the right financing partners.
The Front End: Buy and Rehab
The strategy begins with purchasing a distressed property below market value. This is where a hard money loan is essential, as the property likely won't qualify for conventional financing. The investor uses the hard money loan to fund the acquisition and the rehab.
The rehab must be strategic—adding value that will be recognized by an appraiser later. In California, this often means updating kitchens and bathrooms, or adding livable square footage.
The Back End: Rent and Refinance
Once renovated, the property is leased to a tenant. With stabilized income, the investor approaches a long-term lender (often using a DSCR loan) to refinance the hard money loan.
Because the property is now worth significantly more, a 75% LTV cash-out refinance on the new appraised value can often pay off the original hard money loan and return the investor's down payment, allowing them to repeat the process.
The BRRRR method is powerful but requires precise execution. Utilizing hard money on the front end and a DSCR loan on the back end is the preferred path for California investors.
Conventional lenders usually require you to own the property for 6-12 months before refinancing based on the new appraised value. Some private DSCR lenders have shorter or no seasoning requirements.
Fidelity Funding Corp · Direct California private money lender since 2006
450 N Brand Blvd, 6th Floor · Glendale, CA 91203 · Mon-Fri 8AM-6PM PT