BRRRR Method

· 2 min read
BRRRR stands for Buy, Rehab, Rent, Refinance, Repeat — it’s a strategy that lets you recycle your investment capital by pulling it back out after…

BRRRR stands for Buy, Rehab, Rent, Refinance, Repeat — it’s a strategy that lets you recycle your investment capital by pulling it back out after forcing a property’s value up through renovations.

The goal is to end up owning a cash-flowing rental with little or none of your original money left in the deal. When it works, it’s like an infinite return — your capital is free to go buy the next property.

The Five Steps

Buy: Find a distressed property below market value. Foreclosures, estates, and tired landlords selling off-market are prime targets. You need to buy at a deep enough discount to create an equity margin after rehab.

Rehab: Renovate strategically. Focus on the improvements that add the most value — kitchens, bathrooms, flooring, curb appeal. The goal isn’t a dream home. It’s a rentable, appraisable property that hits the comps.

Rent: Get a tenant in place at market rent. Lenders want to see the property performing before they’ll refinance based on the new value.

Refinance: Once the property is stabilized (renovated, rented, and appraised), do a cash-out refinance. Most lenders will loan 70-75% of the new appraised value. If you bought and rehabbed for less than that number, you get all your cash back.

Repeat: Take the returned capital and do it again. Each cycle adds another rental property to your portfolio.

A Real-World Example

Purchase price: $120,000 (all-cash or hard money). Rehab: $30,000. Total invested: $150,000. After-repair value (ARV): $200,000.

Cash-out refinance at 75% ARV: $150,000 loan. You’ve pulled all $150,000 back out. Now you own a $200,000 property with a $150,000 mortgage that rents for $1,600/month. After expenses and mortgage payment, it cash-flows $200/month. Your money out of pocket? Zero.

Where BRRRR Goes Wrong

Overestimating ARV is the most common killer. If your $200,000 appraisal comes in at $180,000, your max refinance is $135,000 — leaving $15,000 of your capital trapped in the deal. That’s not a disaster, but it slows the repeat cycle.

Rehab cost overruns are the second biggest risk. A $30,000 budget that balloons to $50,000 changes every number in the equation. Get multiple contractor bids and add a 15-20% contingency.

Seasoning requirements trip up beginners too. Most lenders require you to own the property 6-12 months before a cash-out refinance. During that time, you’re carrying the property on whatever short-term financing you used to buy it.

Use our mortgage calculator to model your refinance numbers, check the renovation ROI calculator for rehab planning, and explore more strategies in the glossary.