How to Use BRRRR Method: Buy, Rehab, Rent, Refinance, Repeat Strategy
Master the BRRRR real estate investment strategy to build wealth through rental properties. Learn step-by-step execution, financing tactics, and risk management for sustainable portfolio growth.
🔄 Wealth Building Strategy
BRRRR allows investors to recycle capital repeatedly, building substantial real estate portfolios with limited initial investment. Each successful cycle generates cash flow and forces appreciation.
The BRRRR Method Breakdown
5-Step BRRRR Process
BUY - Acquire Below-Market Properties
Purchase distressed properties at significant discounts using cash or hard money loans.
- • Target 60-70% of ARV (After Repair Value)
- • Focus on distressed, dated, or motivated seller situations
- • Use cash for speed and negotiation power
- • Verify repair estimates and ARV projections carefully
REHAB - Renovate for Maximum Value
Complete strategic renovations that maximize rental income and property value.
- • Focus on functional improvements (kitchens, baths, systems)
- • Budget 15-25% contingency for unexpected issues
- • Manage timeline to minimize carrying costs
- • Document all improvements for appraisal purposes
RENT - Secure Quality Tenants
Market property for optimal rental income with thorough tenant screening.
- • Research comparable rents in area
- • Screen tenants using consistent, legal criteria
- • Execute strong lease agreements
- • Establish 3-6 months of rental history before refinancing
REFINANCE - Extract Capital
Refinance based on improved value to pull out initial investment capital.
- • Target 70-80% LTV on new appraised value
- • Shop multiple lenders for best terms
- • Ensure cash flow remains positive after new payment
- • Consider portfolio lenders for investor-friendly terms
REPEAT - Scale the Process
Use extracted capital to acquire the next property and repeat the cycle.
- • Reinvest refinance proceeds into next property
- • Build systems and team for efficient scaling
- • Track metrics and optimize process over time
- • Consider portfolio diversification as you grow
BRRRR Deal Example Walkthrough
Real Numbers Case Study
Initial Acquisition
Post-Rehab Position
Refinance Analysis
Monthly Cash Flow
🎯 BRRRR Success Metrics
Financing Options for BRRRR
Initial Purchase Financing
Cash Purchase (Optimal)
Fastest, strongest offers with immediate access to property for rehab.
- • No financing contingencies or delays
- • Stronger negotiating position with sellers
- • Can close in 7-14 days
- • Requires significant liquid capital or investors
Hard Money Loans
Short-term financing based on property value, not income.
- • Rates: 8-15% APR, 6-18 month terms
- • 70-80% LTV based on ARV
- • Fast approval and funding (1-2 weeks)
- • Higher costs but enables leverage
Private Money Lenders
Individual investors lending on real estate projects.
- • Rates: 6-12% APR, flexible terms
- • More flexible underwriting
- • Relationship-based lending
- • Can fund rehab costs in addition to purchase
Refinancing Strategies
Refinance Preparation & Execution
Pre-Refinance Requirements
- • 6+ months of rental history and lease agreements
- • Complete renovation documentation and receipts
- • Property management or rent roll statements
- • Updated property insurance and tax assessments
- • Clean title and no outstanding liens
- • Strong personal financial position
Lender Types
- • Portfolio lenders (keep loans in-house)
- • Credit unions (relationship-based)
- • Community banks (local market knowledge)
- • DSCR lenders (income-based qualification)
- • Broker networks (access to multiple lenders)
Loan Terms to Target
- • 70-80% LTV on appraised value
- • 20-30 year amortization
- • Fixed rates when possible
- • No prepayment penalties
- • Reasonable closing costs (2-3% of loan)
- • Non-recourse preferred but rare
Appraisal Optimization
- • Provide comparable sales (renovated properties)
- • Document all improvements with before/after photos
- • Present rental comps to support income approach
- • Ensure property is clean and well-presented
- • Be present during appraisal if possible
Frequently Asked Questions
What loan-to-value ratio is needed for BRRRR refinancing?
Most lenders offer 70-80% LTV on investment property refinances. You need enough equity post-rehab to pull out your initial capital while maintaining positive cash flow with the new mortgage payment.
How long should I wait before refinancing in BRRRR?
Wait 6-12 months after rehab completion before refinancing. This seasoning period allows the property to establish rental history and ensures the appraisal reflects your improvements' full value.
What's the minimum cash flow for a successful BRRRR deal?
Target $200+ monthly cash flow per unit after refinancing to account for vacancies, repairs, and market fluctuations. Factor in all expenses including property management, maintenance reserves, and capex.
🎯 Key Takeaways
- • Buy at 60-70% of ARV to create sufficient equity for refinancing
- • Focus on cash flow positive properties after refinance
- • Build relationships with portfolio lenders for easier refinancing
- • Document all improvements thoroughly for appraisal purposes
- • Scale systematically while maintaining quality standards