What type of loan is best for the BRRRR method?

A hard money or private loan for the purchase and rehab, and a 30-year DSCR or conventional cash-out refinance for the exit. The first is chosen for speed and tolerance of poor condition. The second for a 75% loan-to-value, short seasoning, and a payment the rent can cover.

Hard money funds 85 to 90% of purchase, sometimes rehab in draws, at 10 to 12% interest-only with one to three points, on properties a bank would not touch. It is meant to be paid off within a year.

The refinance loan is the one you keep. Conventional has the lowest rates but needs personal income qualification, six months of seasoning, and caps you at ten financed properties. DSCR qualifies on the rent, allows an LLC, often has no seasoning, and costs about a point more. Most BRRRR investors end up on DSCR after a few properties.