Real estate investing has its own language. If you've heard terms like BRRRR, ARV, cash-out refi, or flip financing and wanted a clear explanation of how each one works — and when to use it — this guide is for you.

BRRRR is a capital recycling strategy. The goal is to pull most or all of your initial investment back out through a refinance after the property is stabilized — then redeploy that capital into the next deal.

The sequence:

1. Buy — Acquire a distressed or undervalued property, often with cash or hard money
2. Rehab — Renovate to increase value and rental appeal
3. Rent — Stabilize with a tenant and establish rental income
4. Refinance — Pull equity out via a DSCR cash-out refinance based on the new appraised value
5. Repeat — Use the returned capital to fund the next acquisition

What makes it work: The spread between your all-in cost (purchase + rehab) and the after-repair value (ARV). If you buy and rehab a property for $280,000 and it appraises at $380,000, a 75% LTV cash-out refi returns $285,000 — more than your total investment.

The risk: Rehab cost overruns, longer-than-expected timelines, and appraisals that come in below your ARV estimate.

ARV is the estimated market value of a property after planned renovations are complete. It's the number that drives every BRRRR and flip calculation.

How lenders use ARV:

• Hard money and bridge lenders often lend 65–75% of ARV (not purchase price)
• DSCR refinances are based on the stabilized appraised value — which should reflect ARV if the rehab is complete
• Conventional investment loans use the appraised value at time of refinance

How to estimate ARV: Comparable sales (comps) of similar renovated properties within 0.5–1 mile, sold within the last 6 months. Your agent and appraiser are your best sources. Do not rely on Zillow's Zestimate for ARV calculations.

A cash-out refinance replaces your existing mortgage with a new, larger loan — and you receive the difference in cash. On investment properties, this is typically done through a DSCR loan.

Key parameters (DSCR cash-out refi):

• Maximum LTV: typically 75–80% on single-family; 70–75% on 2–4 unit
• Seasoning: most programs require 6–12 months of ownership before cash-out
• Qualification: based on the property's DSCR (rental income vs. PITI), not personal income
• LLC vesting: available on most DSCR programs

When it makes sense: After a BRRRR rehab, after significant appreciation, or when you need capital for a new acquisition and don't want to sell.

When it doesn't: When the new rate and payment would push the DSCR below 1.0x, or when the cash-out proceeds don't justify the higher payment.

Flip financing is short-term — typically 6–18 months — and designed for properties that will be sold, not held. Hard money and bridge lenders move fast and care more about the deal than your personal income.

Typical terms:

• Loan-to-cost: 85–90% of purchase + rehab costs
• Loan-to-ARV: 65–75%
• Rate: 10–13% (interest-only)
• Term: 6–18 months
• Points: 2–4 origination
• Speed: 7–14 days to close

The exit: Sell the property (flip) or refinance into a DSCR loan (hold). The exit must be planned before you close the hard money loan.

For most investors in Palm Beach County and the Treasure Coast:

1. Identify the deal and run ARV comps before making an offer
2. Close fast with hard money or cash if the deal requires speed
3. Complete rehab on schedule — every week of delay costs money
4. Stabilize with a tenant and document the lease
5. Refinance into DSCR at 6–12 months seasoning
6. Repeat

Bring us the address, your all-in cost estimate, and your ARV. We'll tell you exactly what the DSCR refi looks like at stabilization — before you commit to the deal.

Call 561-677-2340 or apply online.

This guide is for educational purposes only. Not a commitment to lend. Hard money and bridge loan terms vary by lender and are not offered directly by CFGC Loans. Equal Housing Lender. NMLS #2547138.