What is the BRRRR Method?
BRRRR stands for Buy, Rehab, Rent, Refinance, Repeat. It's an investment strategy that allows you to build a rental portfolio by recycling the same capital over and over again, rather than leaving your money locked in each property.
The strategy was popularized by real estate investor Brandon Turner and has become one of the most powerful wealth-building approaches for real estate investors who want to scale quickly with limited capital.
Step 1: Buy
Find and acquire an undervalued property
The foundation of BRRRR is buying a property below market value. You're looking for distressed properties, motivated sellers, or off-market deals that need work but have strong potential after renovation.
Key Criteria for BRRRR Deals
- Purchase price + rehab = 70-75% of After Repair Value (ARV)
- Strong rental demand in the area
- Post-rehab rent should provide positive cash flow
- Renovation scope is manageable (no structural issues)
Financing Option:Use a fix & flip loan or private money to acquire the property. You'll refinance out of this later.
Step 2: Rehab
Renovate to maximize value and rentability
Unlike a flip where you maximize sale price, a BRRRR rehab focuses on durability and rentability. You want quality that will last with tenants, not luxury finishes that won't increase rent.
Do Prioritize
- • LVP flooring (durable, waterproof)
- • Updated electrical & plumbing
- • New HVAC if needed
- • Fresh paint (neutral colors)
- • Updated kitchens & baths
Skip These
- • High-end appliances
- • Custom cabinetry
- • Expensive tile work
- • Smart home features
- • Luxury lighting fixtures
Timeline Goal: Complete rehab in 60-90 days to minimize holding costs and get to the rent phase quickly.
Step 3: Rent
Place a qualified tenant and stabilize income
Before you can refinance, you need to demonstrate the property's income. Most lenders want to see a signed lease with a qualified tenant.
Tenant Screening Essentials
- Credit check (target 620+ for most markets)
- Income verification (3x rent minimum)
- Employment verification
- Previous landlord references
- Background check
Pro Tip:Price your rent at market rate or slightly below to fill the unit quickly. Vacancy is expensive during a BRRRR—you're still paying interest on your rehab loan.
Step 4: Refinance
Cash-out refinance to recover your capital
This is where the magic happens. You refinance the property at its new, higher value using a DSCR cash-out refinance. The goal is to pull out most or all of your invested capital.
Cash Out = (ARV × LTV) - Existing Loan Payoff - Closing Costs
Example Refinance Scenario
| After Repair Value (ARV) | $250,000 |
| New Loan (75% LTV) | $187,500 |
| Payoff Fix & Flip Loan | -$160,000 |
| Closing Costs | -$5,000 |
| Cash Back to You | $22,500 |
Seasoning Requirements
Most lenders require 3-6 months of ownership before refinancing. However, some DSCR lenders (including programs we offer) allow refinancing with no seasoning—you can refinance immediately after rehab completion.
Step 5: Repeat
Reinvest your capital into the next deal
Take the capital you recovered from the refinance and use it to fund your next BRRRR deal. This is the infinite return concept—once you pull all your money out, any cash flow is return on $0 invested.
The Power of BRRRR: With the same $50,000 in capital, you could do one traditional rental purchase per year, or you could complete 3-4 BRRRR deals, building your portfolio 3-4x faster.
Complete BRRRR Example
Let's walk through a real-world BRRRR deal from start to finish:
| Purchase Price | $150,000 |
| Rehab Budget | $40,000 |
| Closing Costs & Fees | $6,000 |
| Holding Costs (3 months) | $4,000 |
| Total Investment (All-In) | $200,000 |
| Fix & Flip Loan (90% LTC) | $171,000 |
| Your Cash Required | $29,000 |
| After Repair Value (ARV) | $260,000 |
| Monthly Rent | $1,800 |
| Equity Created | $60,000 |
| New DSCR Loan (75% LTV) | $195,000 |
| Payoff Fix & Flip Loan | -$171,000 |
| Refi Closing Costs | -$4,000 |
| Cash Back to You | $20,000 |
Final Results
You now have a cash-flowing rental with $65K equity, and you only have $9K tied up—leaving $20K to put toward your next BRRRR deal!
When BRRRR Works Best
Markets with Value-Add Opportunities
Areas with distressed inventory or motivated sellers
Strong Rental Demand
Markets where tenants are plentiful and rents are stable
Meaningful ARV Spread
Ability to buy at 65-75% of post-rehab value
Experienced Investor
You can manage rehabs and understand the numbers
Access to Short-Term Capital
Fix & flip loans or private money available
DSCR Refinance Available
Long-term financing that qualifies on rental income
Common BRRRR Pitfalls
Overestimating ARV
Problem: If the appraisal comes in lower than expected, you can't refinance out all your capital.
Solution: Use conservative comps and get multiple opinions before buying.
Underestimating Rehab Costs
Problem: Going over budget eats into your equity and may mean you leave money in the deal.
Solution: Add 20% contingency to all rehab budgets.
Ignoring the Rental Math
Problem: If the property doesn't cash flow after refinance, you're paying monthly to hold it.
Solution: Run DSCR calculations before buying to ensure post-refi cash flow.
Long Rehab Timelines
Problem: Every month of holding costs eats your profit and ties up capital.
Solution: Have contractors lined up before closing and manage the project actively.