The BRRRR Method and Gap Funding: A Perfect Match

Supercharging the BRRRR Method with Gap Funding

The BRRRR method (Buy, Rehab, Rent, Refinance, Repeat) is a proven strategy for building a rental portfolio. But the initial "Buy" and "Rehab" phases still require significant capital. By integrating gap funding, you can execute the BRRRR method with absolutely zero personal cash.

The Strategy

1. Buy: Use a hard money loan for 80% of the purchase. Use gap funding (like 0% credit stacking or a term loan) for the 20% down payment and closing costs.
2. Rehab: Use the hard money rehab draws, supplemented by your gap funding for the initial contractor payments.
3. Rent: Place a tenant to stabilize the property and generate income.
4. Refinance: Refinance the property into a long-term DSCR loan based on the new After Repair Value (ARV).
5. Repeat: Use the cash-out refinance proceeds to pay off both the hard money lender and your gap funding.

You now own a cash-flowing rental property with none of your own money left in the deal. Read more about these advanced strategies in our Gap Funding Pillar Guide.