The BRRRR Method (Buy, Rehab, Rent, Refinance, Repeat) is one of the most powerful real estate investment strategies for building wealth with little to no money left in the deal. It allows investors to acquire properties, renovate them, rent them out, and then pull cash out through refinancing—all while using the same initial capital to fund multiple deals. If you’re looking to scale your real estate portfolio efficiently, explore this step-by-step guide to Implementing the BRRRR Method successfully.
What is the BRRRR Method?
The BRRRR strategy is a systematic approach to real estate investing that allows you to buy undervalued properties, rehab them, rent them out, and then refinance to extract capital—so you can repeat the process and grow your portfolio.
The BRRRR Formula:
- Buy – Purchase a distressed or undervalued property.
- Rehab – Renovate to increase property value and rent potential.
- Rent – Place qualified tenants for steady cash flow.
- Refinance – Pull out your original investment through a cash-out refinance.
- Repeat – Use the equity to buy your next property.
The Goal: Keep acquiring rental properties while recycling the same initial investment capital.
Step 1: Buy the Right Property
The success of the BRRRR strategy starts with finding the right property at the right price.
Key Buying Criteria:
- Below-Market Value – Look for distressed properties, foreclosures, or off-market deals.
- Strong Rental Market – Ensure demand for rentals is high in the area.
- Potential for Appreciation – Choose locations with rising property values.
- Price Below 70% of After-Repair Value (ARV) – This leaves room for rehab costs and refinancing.
Best Ways to Find BRRRR Deals:
- MLS Listings – Look for fixer-uppers and foreclosures.
- Off-Market Deals – Use wholesalers, direct mail, and real estate networking.
- Distressed Properties – Target homes with deferred maintenance or motivated sellers.
Pro Tip: Work with a hard money lender or use private real estate funds to finance the purchase if you don’t have enough capital.
Step 2: Rehab the Property for Maximum Value
The rehab phase is where you force appreciation by increasing the property’s market value and rent potential.
Renovation Priorities:
- Structural Repairs – Roof, foundation, plumbing, and electrical.
- Kitchens & Bathrooms – Most impactful upgrades for rental value.
- Flooring & Paint – Budget-friendly improvements with a high return.
- Curb Appeal – Landscaping, fresh paint, and exterior fixes.
Rehab Budgeting:
- Aim for $2 in increased value for every $1 spent on renovations.
- Keep costs below 25% of the property’s ARV for optimal refinancing.
Pro Tip: Use real estate investor funding options like probate cash or joint ventures to cover renovation costs.
Step 3: Rent the Property for Cash Flow
Once renovations are complete, the next step is to find quality tenants and generate steady rental income.
How to Find the Right Tenants:
- List on Zillow, Apartments.com, Facebook Marketplace
- Require background & credit checks
- Set rent at 1% of property value (1% Rule) for strong cash flow
Pro Tip: Use property management software like Avail or Buildium to automate rent collection and screening.
Step 4: Refinance & Pull Out Your Cash
This is the most important step—the refinance phase allows you to recover your initial investment so you can repeat the process.
How a BRRRR Refinance Works:
- Wait for 6 months (lenders typically require a seasoning period).
- Order a new appraisal to confirm the property’s After-Repair Value (ARV).
- Apply for a cash-out refinance loan based on the ARV.
- Use the loan proceeds to pay off your initial financing (hard money/private loan).
Key Loan Requirements:
- LTV (Loan-to-Value) Ratio – Most lenders allow up to 75% of ARV.
- Good Credit Score – 680+ is ideal for the best refinance rates.
- Stable Rental Income – Lenders want to see positive cash flow.
Pro Tip: Partner with real estate private equity funds to improve your loan eligibility and reduce risk.
Step 5: Repeat the Process & Scale Your Portfolio
Once you’ve refinanced and pulled out your initial investment, you can repeat the process and acquire more properties.
How to Scale Efficiently:
- Use Private & Hard Money Lenders – Faster financing helps you close more deals.
- Track Key Metrics – Ensure each property meets your cash flow and ROI targets.
- Build a Reliable Team – Contractors, property managers, and lenders make scaling easier.
Pro Tip: Use double closing funding or EMD funding to streamline deals and expand your portfolio.
Real BRRRR Example: How a $100K Investment Turns Into a Portfolio
Step 1: Initial Purchase & Rehab
- Purchase Price: $100,000
- Renovation Cost: $30,000
- Total Investment: $130,000
Step 2: Refinancing
- New Appraised Value (ARV): $200,000
- Lender Allows 75% LTV: $150,000 Loan
- Cash Pulled Out: $130,000 (pays off initial investment)
Now you have your original capital back to buy another property and repeat the process!
Pros & Cons of the BRRRR Method
Pros:
- Minimal Cash Left in Deals – Use the same capital to acquire multiple properties.
- Passive Income & Equity Growth – Build long-term wealth through rentals.
- Forced Appreciation – Increase property value through renovations.
Cons:
- Risk of Over-Renovating – Overspending on rehab can kill your profit margins.
- Appraisal Risks – If the property doesn’t appraise as expected, you may not pull out enough cash.
- Lender Restrictions – Some banks have seasoning periods before refinancing.
Pro Tip: Always buy at a deep discount (under 70% of ARV) to mitigate risks.
Final Thoughts: Is BRRRR Right for You?
The BRRRR method is one of the best ways to scale a real estate portfolio quickly without tying up all your capital. By strategically buying, rehabbing, renting, and refinancing properties, you can create passive income, build equity, and expand your investments—all while using the same initial funds.
Ready to start your BRRRR journey? Contact us today to explore real estate financing options like double closing funding, private money, transactional funding, and renovation loans!
