Thinking about building a rental portfolio in North Carolina without tying up your cash for years? The BRRRR method can help you buy right, add value, refinance to pull capital back out, and use it again on the next deal. If you are investment minded and want a clear path to scale in NC, you are in the right place. In this guide, you will get a step-by-step plan, NC-specific rules to watch, and a practical underwriting example you can adapt. Let’s dive in.
What BRRRR means in NC
BRRRR stands for Buy, Rehab, Rent, Refinance, Repeat. The goal is to recycle your capital while you grow equity and cash flow. You will track a few key metrics: After Repair Value (ARV), rehab costs, monthly cash flow, cap rate, cash-on-cash return, and post-refinance loan-to-value (LTV).
Investors often start with the “70 percent rule” as a quick filter. That means you pay no more than 70 percent of ARV minus rehab costs. Treat this as a heuristic, not a rule. In NC, neighborhood-level comps, local permit timelines, and insurance costs can shift what works. Always use local data to fine-tune your numbers.
North Carolina is diverse. Charlotte and the Triangle move differently than the High Country, Asheville, or coastal counties. Permit processes, flood risk, and rent trends vary by city and county. You will win by leaning into submarket details, not statewide averages.
Step-by-step BRRRR in North Carolina
1) Buy: Target value and risk
- Focus on properties you can buy at a discount to ARV with a clear rehab plan.
- Verify zoning and code enforcement history with the local building department.
- If the property is near the coast or a floodplain, check FEMA Flood Insurance Rate Maps before you offer. Use the FEMA Flood Map Service Center to confirm the parcel’s risk.
- Build a budget with a 10 to 20 percent contingency for unknowns. Older NC homes can hide surprises.
2) Rehab: Plan, permit, and manage
- North Carolina enforces statewide building codes through local permits and inspections. Expect permits for structural, electrical, plumbing, HVAC, and major exterior work.
- Hire licensed and insured contractors and get line-item bids and written timelines. For homes built before 1978, the EPA Renovation, Repair and Painting (RRP) Rule requires lead-safe practices by certified firms.
- Sequence inspections early to avoid delays. Urban jurisdictions may have more structured scheduling, but timing still varies.
3) Rent: Stabilize income
- Market the home once it is rent-ready. Screen fairly and follow North Carolina landlord-tenant law in all steps.
- State rules for deposits, notices, and evictions are found in N.C. General Statutes Chapter 42.
- Plan for realistic lease-up time. In many NC markets, stabilization can take 30 to 90 days depending on season and demand.
4) Refinance: Pull capital back out
- Most investors use a cash-out refinance to recover acquisition and rehab funds. Lenders often require seasoning of 6 to 12 months before a cash-out. This varies by product and lender.
- Conventional investor refinances commonly top out around 65 to 75 percent LTV, subject to credit, property type, and lender overlays.
- Agency and portfolio lenders will order an appraisal and may require completion inspections. Review seasoning and LTV rules with your lender up front. For guidance on agency rules, start with the Fannie Mae Selling Guide and the Freddie Mac Seller/Servicer Guide.
5) Repeat: Deploy your playbook again
- Use proceeds to buy the next property. Keep clean records of permits, invoices, and inspections to support future appraisals and tax reporting.
Financing your BRRRR in NC
- Hard-money or private bridge loans: Fast closings and rehab funds, but higher rates and fees. Lenders often want to see your refinance plan and property management strategy.
- Renovation loans: FHA 203(k) requires owner-occupancy, which makes it a poor fit for investors who plan to rent right away. Review program details on the HUD FHA 203(k) page. Some conventional renovation products can fit investor use, but terms and availability vary.
- Conventional or portfolio loans: Many NC investors purchase with cash or bridge debt, then refinance into a conventional or portfolio loan. Local banks and credit unions in Charlotte, the Triangle, Greensboro, Wilmington, Asheville, and mountain markets may offer flexible structures and faster decisions.
- DSCR or bridge-to-permanent loans: Some lenders underwrite based on property cash flow rather than personal income. Expect appraisal scrutiny and documentation of market rents.
Before you commit, confirm:
- Seasoning required before refinance.
- Max LTV for investment cash-out refinance.
- Appraisal process and how ARV is validated.
- Occupancy rules for any renovation loan.
Legal, permitting, and compliance in NC
Permits and building code
- NC adopts statewide codes, and local offices issue permits and inspections. Structural, electrical, plumbing, HVAC, and exterior work typically require permits. Build inspection time into your schedule.
Contractor licensing and safety
- Verify your contractor’s state license and insurance. Require lien waivers with progress payments. If the home is pre-1978, the EPA RRP Rule applies and contractors must be RRP-certified.
Landlord-tenant rules
- North Carolina law governs leases, deposits, repairs, and evictions. Review Chapter 42 of the NC General Statutes and follow local court procedures. Eviction timelines vary by county and case specifics.
Insurance and hazards
- For properties in Special Flood Hazard Areas with federally regulated mortgages, flood insurance is typically required. Confirm the parcel’s status using the FEMA Flood Map Service Center. On the coast, budget for windstorm exposure and possible premium differences.
Property taxes and assessments
- Counties assess property taxes on a set cycle. After a major rehab, assessed value can rise at the next assessment. See the North Carolina Department of Revenue’s property tax resources for general guidance at the NCDOR property tax page.
Taxes on rentals and refinancing
- Rental property is typically depreciated over 27.5 years. Repairs are usually deductible in the year incurred, while capital improvements are depreciated. Selling can trigger capital gains, but a refinance is a loan and is generally not taxable. Review IRS Publication 527 and consult your tax professional.
Underwriting example: a realistic NC BRRRR
Below is a simple model you can adapt to your submarket. Numbers are illustrative and for planning only.
- Purchase price: 150,000
- Rehab budget: 35,000
- Contingency (10 percent): 3,500
- Closing and holding costs: 5,000
- Total initial investment: 193,500
- ARV based on local comps: 260,000
Refinance scenario
- Target cash-out refinance LTV: 70 percent of ARV
- New loan amount: 182,000 (0.70 x 260,000)
- Cash back at refinance: 182,000 minus 193,500 = -11,500 (you keep about 11,500 invested)
Rent and cash flow snapshot
- Market rent estimate: 2,000 per month (verify with local comps and managers)
- Vacancy allowance: 5 percent = 100
- Effective rent: 1,900
- Operating expenses (taxes, insurance, repairs, utilities paid by owner, management): 700
- Estimated NOI: 1,200 per month, or 14,400 per year
Performance metrics
- Cap rate at ARV: 14,400 divided by 260,000 = 5.5 percent
- Post-refi equity: ARV minus loan = 78,000
- Cash-on-cash: Annual cash flow divided by cash left in the deal. If your annual cash flow is 6,000 and you have 11,500 left in, cash-on-cash is about 52 percent. Your numbers will vary with actual expenses, taxes, insurance, and interest rate.
Key takeaways
- The refinance may not return every dollar. You often leave some capital in the deal if LTV limits the payout.
- Appraisals hinge on true comps for renovated homes in the immediate area. Keep a clean rehab file with permits and invoices to support value.
Timeline and checklist
Typical sequence and timing
- Market and deal sourcing: weeks to months
- Underwrite and plan: days to weeks
- Finance acquisition: days to weeks
- Rehab: 4 to 24 plus weeks
- Rent and stabilize: 2 to 12 weeks
- Refinance: 6 to 12 plus months after purchase depending on lender
- Repeat: varies by deal flow and capital
NC due diligence checklist
- Confirm zoning, permit needs, and any code enforcement history.
- Pull a FEMA flood zone determination and budget for flood insurance if needed.
- Check for any local rental licensing or registration requirements.
- Verify contractor licensing, insurance, and RRP certification for pre-1978 homes.
- Get multiple bids with line items, schedules, and lien waiver terms.
- Verify seasoning and max LTV with your lender before you start rehab.
- Keep detailed records of permits, invoices, and photos for appraisal and taxes.
Common pitfalls in NC and how to avoid them
- Under-budgeting rehab: Add 10 to 20 percent contingency and get detailed scopes.
- Assuming you can refinance fast: Confirm seasoning rules and appraisal requirements in writing.
- Overestimating rents: Use current local comps and conservative vacancy.
- Skipping permits: Engage the building department early to avoid delays and rework.
- Using FHA 203(k) without an occupancy plan: FHA requires owner-occupancy, so it is not a fit for immediate rental unless you plan to live in the property first per program rules.
When to partner with a local advisor
You can accelerate your results when you have a team that knows the ground truth in North Carolina. A trusted advisor can source deals, underwrite ARV and rents, structure financing paths, plan a compliant rehab, and guide you through closing.
If you want a data-driven partner with investment expertise across Western NC, the Triangle, Charlotte, and select coastal markets, Infinite Properties Group can help you source, underwrite, negotiate, and close BRRRR-ready properties. Schedule a Call to align your criteria with real inventory and a clear execution plan.
FAQs
Can I use FHA 203(k) for BRRRR in North Carolina?
- FHA 203(k) requires owner-occupancy, so it is not designed for an investor who wants to rent immediately. Review the program on the HUD FHA 203(k) page and confirm details with your lender.
How long before I can do a cash-out refinance in NC?
- Many lenders require 6 to 12 months of seasoning before a cash-out refinance. Rules vary by product and lender overlays. Review agency guidance in the Fannie Mae Selling Guide or Freddie Mac Guide and verify with your lender.
Do I need flood insurance for BRRRR properties in NC?
- If the property is in a FEMA Special Flood Hazard Area and has a federally regulated mortgage, flood insurance is typically required. Check the parcel on the FEMA Flood Map Service Center.
Are NC contractors required to follow lead-safe rules?
- For homes built before 1978, contractors disturbing painted surfaces must follow the EPA RRP Rule and be RRP-certified. Always verify licensing and insurance.
Is a cash-out refinance taxable in North Carolina?
- A refinance is a loan and is generally not taxable. Selling can trigger capital gains tax rules. Review IRS Publication 527 and consult a tax professional.
