What is the BRRRR method, and does it work in Texas?

BRRRR is buy, rehab, rent, refinance, repeat. It works in Texas, with one constitutional catch: if the property is the borrower's homestead, the refinance is a Section 50(a)(6) loan capped at 80 percent loan-to-value with a 12-day waiting period. A rental held as an investment is not the homestead and is not governed by 50(a)(6).

The five steps

Buy a property below its post-repair value, usually one that will not finance conventionally in its current condition. Rehab it. Rent it, so it produces income and an appraiser has something to value. Refinance to pull the invested capital back out. Repeat with the recycled capital.

The whole model lives or dies on the fourth step. Everything before it is ordinary renovation work. The refinance is what turns a one-time flip into a repeatable machine, and it is the step where Texas is genuinely different from every other state.

Why the refinance step is different in Texas

Texas protects the homestead in its Constitution, not merely by statute. If the property being refinanced is the borrower's homestead, the cash-out is a home equity loan under Article XVI, Section 50(a)(6), and it carries limits that do not exist elsewhere:

80 percent loan-to-value maximum. All loans secured by the homestead, combined, cannot exceed 80 percent of fair market value at closing. At least 20 percent equity must remain.
A 12-day waiting period — the loan cannot close until at least 12 days after the later of the application or the borrower's receipt of the required notice.
A 2 percent fee cap on fees, excluding the appraisal fee, land survey fee, title insurance premium and title search or examination.
Generally non-recourse — the lender cannot pursue the borrower personally for a deficiency.
One at a time, and 12 months must pass between home equity closings.

Sources: Rocket Mortgage, Hurst Lending. Full mechanics: what is a Texas cash-out refinance under Section 50(a)(6).

For a BRRRR strategy, the two that bite hardest are the 80 percent ceiling and the 12-month rule. The 80 percent ceiling means a fifth of the after-repair value stays trapped in the property permanently. The 12-month rule means a house-hacking investor who refinances their own residence cannot do it again the following quarter, no matter how good the next deal is.

The investment property is a different animal

A rental held in the investor's name as an investment property is not the homestead, and is not governed by Section 50(a)(6). The Texas Constitution's home equity restrictions apply to the homestead. That is the whole reason a classic BRRRR sequence is workable here at all.

The limits that replace them come from the lender, not the constitution: the lender's own loan-to-value requirements, its seasoning requirement — how long the property must be owned or how long the current value must have existed before a cash-out is allowed — its reserve requirements, its debt service coverage test, and its cap on the number of financed properties.

Those vary by lender and by product, and they change. Any specific loan-to-value number or seasoning period on a blog is a number for someone else's loan program. Get the current terms in writing from a lender before buying the property, because the whole model is a bet on that refinance existing on those terms four to eight months later.

The failure mode is specific and common: the rehab runs long, the appraisal lands below the projected after-repair value, and the cash-out at the lender's loan-to-value leaves the investor short of the capital they needed to move on. Then the deal that was supposed to recycle capital has consumed it.

Where the homestead question gets slippery

The clean version is easy: the investor lives in one house and rents four others. The four are investment property.

The version that trips people up is the house-hack. An investor who buys a duplex, lives in one side and rents the other has a homestead. An investor who lives in a property during the rehab and moves out to rent it has to pin down what that property is at the time of the refinance, and whether a homestead designation was ever filed or claimed. Homestead character is a legal question with a tax consequence attached, and it belongs to a Texas real estate attorney and a CPA, not to an assumption. Getting it wrong means applying for the wrong loan product and finding out at underwriting.

The property tax side, which the pro forma usually ignores

Converting a property to a rental changes its property tax treatment in three ways.

No homestead exemption. The residence homestead exemptions — including the school district exemption of $140,000, raised from $100,000 by Proposition 13, approved by voters in November 2025 and implemented by SB 4 of the 89th Legislature for tax year 2026 — apply only to a residence homestead (Texas Comptroller). A rental gets none of it.

No 10 percent cap. The 10 percent annual limit on increases in net appraised value applies to properties that already have a homestead exemption. A rental does not get it.

The circuit breaker instead — for now. Non-homestead real property valued at or below an annually indexed threshold is covered by a separate 20 percent cap on appraised value under Tax Code Section 23.231, created by SB 2 (2023) as a pilot for tax years 2024, 2025 and 2026. It expires December 31, 2026 unless the Legislature renews it (Travis CAD, summary of 2023 Texas property tax law changes). It excludes land under agricultural special appraisal and homesteads already under the 10 percent cap.

That expiration date is a live underwriting item for anyone buying a Texas rental in 2026 with a five-year hold. A pro forma that assumes 20 percent as a permanent appraisal ceiling is assuming a statute that sunsets. Model it both ways. Detail: how rental properties are taxed differently in Texas.

For Boerne and the rest of Kendall County, the appraisal district is Kendall Appraisal District (kendallad.org) — not Bexar CAD. Boerne is in Kendall County, not the City of San Antonio.

So does BRRRR work in Texas

Yes, with the refinance structured on the investment side rather than against a homestead, and with three things pinned down before the purchase rather than after the rehab:

The lender's actual cash-out terms and seasoning requirement, in writing, for the product the investor will use.
Whether the property will be the homestead at the time of the refinance, answered by a Texas real estate attorney and a CPA if there is any ambiguity.
A property tax line that reflects no homestead exemption, no 10 percent cap, and the circuit breaker's December 31, 2026 expiration.

A model that survives all three is a model. One that assumes national-average refinance terms and homestead tax treatment is a spreadsheet.

Questions about a specific property?

Call or text 830-446-3847 · Email heath.shepard@kw.com

This page explains how Texas rules affect an investment strategy as of September 2026 and is not legal, tax or lending advice. A lender sets loan terms, a CPA handles tax treatment, and a Texas real estate attorney answers homestead and title questions.