Does Grafton Funding offer DSCR loans for rental properties?

Yes — DSCR (Debt Service Coverage Ratio) loans are our most popular product. We lend on single-family rentals, 2–4 unit properties, short-term rentals (like Airbnb and VRBO), and small multifamily up to 10 units. We qualify the property on its rental income rather than your personal income or tax returns. Minimum DSCR is typically 1.0x, and we lend in TX, FL, GA, NC, SC, and other states.

Does Grafton Funding do fix and flip loans or bridge loans?

Yes. We provide fix and flip loans and bridge loans for non-owner occupied investment properties. Our programs cover the purchase price plus rehab costs, with fast closings. Loan terms are short-term (typically 12–18 months) and are designed around the investor's exit strategy — either sale or refinance.

Can I get a DSCR loan for an Airbnb or short-term rental property?

Yes — we specialize in short-term rental (STR) financing. We use either the property's actual Airbnb or VRBO income history or a market-rate STR income estimate to qualify the loan. You don't need W-2s or tax returns.

Does Grafton Funding offer new construction loans for investment properties?

Yes. We offer new construction loans for non-owner occupied residential investment properties, including spec builds, ground-up construction, and lot + build projects. These are short-term loans that fund in draws as construction progresses.

Does Grafton Funding lend in North Carolina?

Yes — we actively lend in North Carolina, including the Charlotte metro, the Triangle (Raleigh/Durham/Chapel Hill), Wilmington, and Asheville. We offer DSCR rental loans, fix and flip loans, and new construction financing for NC investment properties. Local NC line: (910) 218-1286.

Can I qualify for a loan without showing tax returns or personal income?

Yes — our DSCR loans are underwritten based on the property's rental income, not your personal income or tax returns. This makes them ideal for self-employed investors and business owners. We do require a credit check and down payment, but there's no traditional income verification.

What credit score do I need to get a loan from Grafton Funding?

For most DSCR rental loan programs, we generally look for a minimum credit score in the 660–680 range, though this can vary by program and loan-to-value. Fix and flip loans may have different requirements depending on experience and deal strength.

How much do I need to put down for a DSCR loan?

For DSCR rental loans, we typically lend up to 75–80% loan-to-value (LTV), meaning you'd need 20–25% as a down payment. The exact LTV depends on the property type, DSCR ratio, and your credit profile. We lend exclusively on non-owner occupied investment real estate.

How quickly can Grafton Funding close a loan?

Many of our transactions close in 2–4 weeks depending on the loan type, property, and how quickly documentation is provided. We prioritize responsive communication and efficient underwriting for investors who need to move fast on deals.

Does Grafton Funding work with first-time real estate investors?

Yes — we work with both new and experienced investors. For DSCR rental loans, first-time investors are welcome as long as the property cash flows and the borrower meets our credit and down payment requirements. For fix and flip loans, some experience is preferred but not always required.

BRRRR Strategy Financing: How to Fund Buy, Rehab, Rent, Refinance, Repeat

2 days ago
6 min read

The BRRRR strategy — Buy, Rehab, Rent, Refinance, Repeat — is one of the most powerful frameworks in real estate investing. When executed correctly, it allows investors to recycle their capital across multiple properties rather than having it permanently tied up in each deal.

But the strategy only works if you understand how to finance it.

The financing at each stage of BRRRR is different. Most investors use two separate loan products: a short-term bridge or fix & flip loan for the acquisition and rehab, and a DSCR loan for the refinance. Getting the right financing at each step — and planning the exit before you start — is what separates successful BRRRR investors from those who get stuck.

Quick Answer: The BRRRR strategy is typically financed with a bridge or fix & flip loan for the purchase and renovation, then a DSCR cash-out refinance once the property is stabilized and renting. The goal is to refinance out enough equity to recycle into the next deal. DSCR loans are ideal for the refinance step because they qualify on rental income, not personal income.

What Is the BRRRR Strategy?

Buy — Acquire a distressed or undervalued property below market value
Rehab — Renovate it to increase value and make it rentable
Rent — Place a tenant and stabilize the income
Refinance — Pull cash out based on the new, higher value
Repeat — Use the cash to buy the next property

The core appeal is capital recycling. Rather than tying up $50,000–$80,000 in a down payment per property indefinitely, a well-executed BRRRR allows you to recover most or all of your initial capital through the refinance — then deploy it again.

Step 1: The Buy — Using a Bridge or Fix & Flip Loan

BRRRR properties are typically distressed and don't qualify for permanent financing. Bridge loans and fix & flip loans are built for this phase — they close in 3–14 business days, finance both the purchase and the renovation, and qualify based on after-repair value (ARV) rather than current condition.

How draw-based rehab financing works:

You complete a phase of the rehab
The lender sends an inspector to verify work is done
Funds are released for that phase
You continue to the next phase

This draw schedule protects both the borrower and the lender by ensuring funds are used as intended.

Ready to Finance Your Next BRRRR Deal?

Grafton Funding offers both bridge/fix & flip loans and DSCR refinances — the complete BRRRR financing stack.

View Fix & Flip Loan Programs

Step 2: The Rehab

The rehab phase is operational, not financial — but financial discipline here determines whether the BRRRR works.

Common rehab mistakes that derail BRRRR financing:

Budget overruns — going over your rehab budget reduces the cash you can pull out in the refinance
Timeline delays — longer rehab means more interest accruing on the bridge loan
Over-improving the property — installing premium finishes in a market that only supports basic finishes won't increase the ARV proportionally

Tip: Build a 10–15% contingency into your rehab budget before you close the acquisition loan.

Step 3: The Rent — Stabilizing Before the Refinance

Most DSCR lenders require the property to be stabilized before they will approve a refinance — meaning the rehab is complete and a tenant is in place (ideally with a signed lease for at least 30–90 days).

Some DSCR lenders will refinance a vacant property if the appraisal rent schedule shows a strong market rent and a clear DSCR above 1.0. But having a signed lease strengthens the application considerably.

Step 4: The Refinance — The DSCR Cash-Out Loan

This is the critical financial step. DSCR loans are ideal for the BRRRR refinance because they qualify on the property's rental income, not your personal income — and they're available to LLCs with no limit on the number of financed properties.

Example refinance math:

Purchase price (distressed): $120,000
Rehab cost: $40,000
Total invested: $160,000
After-repair value (ARV): $220,000
DSCR cash-out refi at 75% LTV: $165,000
Loan pays off bridge loan balance: ~$140,000
Cash back to investor: ~$25,000

The goal: pull out enough in the refinance to cover your out-of-pocket costs from the acquisition and rehab — leaving you with the property, rental income, and your capital back.

Step 5: The Repeat

With the refinance complete, you hold the property with a long-term DSCR loan, collect monthly rent, and redeploy your recovered capital into the next BRRRR deal. Because DSCR loans don't count against your personal debt-to-income ratio, there's no hard limit on how many times you can repeat this cycle.

The Numbers That Make BRRRR Work

Buy at 70–75% of ARV (purchase price + rehab = no more than 70–75% of after-repair value)
Rehab on budget and on schedule — every week of delay is additional bridge loan interest

Strong rent-to-value ratio — the property needs to generate enough rent to achieve a DSCR of 1.0+ on the refinance loan.

A clear exit before you buy — know your bridge lender, your DSCR lender, and the refinance terms before you close the acquisition

Common BRRRR Financing Mistakes

Not having the refi lender identified before you buy.

Identify your DSCR refinance lender before you close the acquisition. Some investors execute the bridge/rehab perfectly, then struggle to refinance because they haven't lined up a DSCR lender in advance.

Overpaying on the acquisition.

If the purchase price + rehab equals more than 75% of ARV, you won't be able to refinance out enough to recover your capital. Ignoring prepayment penalties on the DSCR refinance loan.

If you plan to sell or refinance again within a few years, the prepayment penalty on your DSCR loan can be significant. Discuss penalty structure options with your lender before closing.

Bottom Line

The BRRRR strategy uses a bridge or fix & flip loan for acquisition and rehab, then a DSCR cash-out refinance to recycle capital
The refinance works best when total cost (purchase + rehab) equals no more than 70–75% of ARV
DSCR loans are ideal for the refinance step — no personal income, no DTI, available to LLCs
Identify your DSCR lender before you close the acquisition loan — not after the rehab
Prepayment penalty structure should be reviewed if you plan to exit the DSCR loan within the first few years

Frequently Asked Questions

What type of loan is used to buy a BRRRR property?

BRRRR properties — typically distressed and requiring renovation — are purchased with bridge loans or fix & flip loans, not DSCR loans. These short-term loans (6–18 months) close fast, finance both the purchase and rehab, and qualify based on after-repair value (ARV). Once the property is stabilized and rented, it is refinanced into a long-term DSCR loan.

How long do I have to wait before refinancing into a DSCR loan?

Most DSCR lenders require the property to be stabilized before approving a refinance — generally meaning the rehab is complete and a tenant is in place. For cash-out refinances after a cash purchase, most lenders impose a 3–6 month seasoning requirement. Refinancing out of a bridge loan typically has no seasoning requirement, as bridge loans are understood to be temporary.

Does the DSCR refinance require personal income documentation?

No. DSCR refinances qualify on the property's rental income — not your personal W-2s or tax returns. This is a core advantage of the DSCR product for BRRRR investors, many of whom are self-employed or have complex income structures.

How do I know if I'll be able to pull all my capital out in the BRRRR refinance?

The math depends on total project cost vs. ARV. If your purchase price + rehab costs total 70–75% of ARV, the refinance can typically return most or all of your out-of-pocket capital. If your total cost is above 75% of ARV, you'll likely leave some capital in the deal. Run the numbers before you close the acquisition loan.

How do prepayment penalties affect the BRRRR strategy?

If you plan to refinance out of the DSCR loan within the first few years (to do another BRRRR cycle), the prepayment penalty can be significant. A 5-4-3-2-1 penalty on a $200,000 loan means $8,000–$10,000 if you refinance in years 1–2. Discuss prepayment penalty options with your lender before closing — shorter structures (3-2-1) or no-prepay options may be available at a slightly higher rate.

Ready to Finance Your Next BRRRR Deal?

Grafton Funding offers both fix & flip bridge loans and DSCR refinances — a one-stop shop for the BRRRR strategy. Whether you're starting your first BRRRR or repeating it for the tenth time, we can structure the right financing at every stage.

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