The BRRRR method, funded.

BRRRR is how a lot of Maryland investors build a rental portfolio without tying up all their cash in every deal. Done right, you recycle most of your capital out of each property and roll it into the next. Done wrong, you get stuck with money trapped in a house that won't refinance. The difference is almost always the financing and the numbers.

What BRRRR stands for

• Buy a distressed or undervalued property — usually with short-term money, because it needs work and a fast close.
• Rehab it, funding the renovation in stages (draws).
• Rent it to a qualified tenant so the property produces income.
• Refinance into a long-term loan based on the new, higher value and the rent — pulling your capital back out.
• Repeat with the capital you recovered.

Why the financing comes in two parts

A distressed property has no income and needs renovation, so a long-term rental lender won't touch it yet. That's the job of a short-term loan. Once it's fixed and rented, it's a clean, income-producing asset a long-term lender will refinance. So BRRRR uses two loans back to back:

• Phase 1 — the short-term loan (this is where we come in). MD Private Lender funds the purchase and the rehab — up to 100% of purchase and 100% of rehab on strong deals — and releases draws in 24–48 hours so the work stays on schedule.
• Phase 2 — the long-term refinance. Once stabilized, you refinance into a 30-year rental loan, often a DSCR loan that qualifies on the property's cash flow.

The math that makes or breaks it

BRRRR works when the refinance pulls most of your money back out. That only happens if you bought right and the after-repair value (ARV) is real. The key numbers:

• ARV — what the finished, rented property is worth. Everything keys off this. See ARV, LTV & draws explained.
• All-in cost — purchase + rehab + holding + closing. If this is well below ARV, BRRRR works.
• Refinance LTV — a long-term lender typically refinances up to 70–75% of the new value. If 75% of ARV is more than your all-in cost, you recover your capital (sometimes all of it).
• Rent & DSCR — the rent has to cover the new payment with room to spare, or the refinance shrinks.

Where Maryland investors go wrong

• Optimistic ARV. If the appraisal comes in low, your refinance — and your recovered capital — comes in low too.
• Underbudgeted rehab. Older Baltimore-area housing hides surprises. A blown budget eats your spread.
• Ignoring the seasoning period. Some refinance lenders require you to own (or have it rented) for a few months before they'll lend on the new value. Plan your holding costs for it.
• No margin. If you're all-in at 80%+ of ARV, there's nothing to pull back out. Buy with a cushion.

A quick BRRRR example

1. Buy a rowhome for $120k that needs $50k of work; ARV is $250k.
2. Short-term loan funds the $120k purchase and the $50k rehab, closing fast.
3. You renovate (drawing funds as you go) and rent it for $2,300/month.
4. Refinance at 75% of the $250k ARV = $187,500 — which covers your $170k all-in and then some.
5. Most of your cash comes back out, the rental cash-flows, and you go find the next one.