On a $200k ARV property with a 75% LTV DSCR loan: $200k x 0.75 = $150k loan amount. If you paid $120k purchase and $35k rehab ($155k total), a $150k refinance recovers $150k — getting you back to within $5k of your full investment. That is the power of buying at 60% ARV.
Most DSCR lenders require a DSCR ratio of 1.20–1.25x. Monthly rent must be 1.20x the full PITI (principal, interest, taxes, insurance). On a $150k loan at 7.5% for 30 years, PITI runs approximately $1,400/month. You need rent of $1,680+ per month to meet a 1.20x DSCR requirement. Know this number before you buy so you can confirm the rent support.
Most DSCR lenders have a 6–12 month seasoning requirement after purchase. During this window, they use your purchase price rather than appraised value for the LTV calculation. After seasoning ends, they use the full appraised ARV. Plan your BRRRR timeline to target the refinance 6–12 months after purchase — with the tenant in place and the property stabilized.
The refinance appraisal determines your cash-out amount. Prepare for the appraiser: submit a list of all improvements made with costs, pull your own comps before the appraisal, and make sure the property is clean and all rehab is complete. Appraisers who see an unfinished scope will note it and reduce value. A $10k appraisal bump from proper preparation can return $7,500 in additional cash-out proceeds.
Dan White is a licensed Virginia real estate agent at Pearson Smith Realty and founder of FreeDealCalc.com. He has been investing in Northern Virginia real estate for 20+ years.