BRRRR strategy — refinance rental property to buy another investment property
Portfolio Strategy

Refinance a Rental Property to Buy Another Investment Property

Using equity from one rental to fund the next — BRRRR strategy, DSCR stacking, deal sequencing, and what lenders review when scaling a rental portfolio.

Quick Answer

Yes, you can cash-out refinance one rental property to fund the down payment on the next. This is the core of the BRRRR strategy (Buy, Rehab, Rent, Refinance, Repeat). The key constraint: the refinanced property must still cash flow at the required DSCR after the new, larger payment. If the DSCR holds, the extracted equity becomes the seed capital for the next deal.

The BRRRR + DSCR Sequence

  1. 1Buy a property below market (often distressed) using cash or hard money.
  2. 2Rehab the property to rent-ready condition.
  3. 3Rent the property at market rate, establishing the DSCR numerator.
  4. 4Refinance with a DSCR cash-out loan, pulling equity out tax-free.
  5. 5Repeat — use the extracted equity as the down payment on the next property.

Example BRRRR DSCR Scenario

Property A — Purchased for $180K cash, $40K rehab, ARV $280K

After rehab and renting at $2,600/mo:

  • Cash-out refi at 75% LTV: $280K × 75% = $210K new loan
  • P&I at 7.25%: $1,432 | PITIA: ~$1,900/mo
  • DSCR: $2,600 ÷ $1,900 = 1.37 ✓ Strong
  • Cash returned: $210K - initial $220K invested = ($10K) still in the deal

If purchased below market, the investor can pull out more than invested — creating infinite-return capital for the next deal.

FAQs

Related Guides

Cash-Out Refinance for Rental PropertyHow Much Cash Out Can You Get?

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Disclaimer: Educational only.

Last Updated: June 21, 2026