The five steps
Buy: acquire below market or with value-add potential. Rehab: force appreciation through improvements. Rent: stabilize income. Refinance: pull capital out based on new value. Repeat: redeploy into the next deal.
Capital stack in practice
The initial purchase and rehab are often funded with hard money, fix and flip, or bridge capital. The refinance is frequently a DSCR loan based on stabilized rent.
Your goal is to minimize cash left in the deal after refi while maintaining a DSCR lenders will accept.
Model before you buy
Use a BRRRR analyzer to estimate equity created, cash left in deal, and rent-to-basis before you commit. Adjust ARV and refi assumptions conservatively.