The BRRRR Method: Buy, Rehab, Rent, Refinance, Repeat
6 min read
How the BRRRR strategy recycles your capital across rental deals — the five steps, the refinance math, and the risks to watch.
What BRRRR stands for
BRRRR is Buy, Rehab, Rent, Refinance, Repeat. It is a rental-investing strategy whose whole point is to get most of your original cash back out of a deal so you can use it again — instead of leaving a full down payment tied up in every property.
Done well, the same $60,000 can seed a first rental, come back out at refinance, and go into a second — compounding a portfolio far faster than buy-and-hold with fresh capital each time.
The five steps
Buy a distressed property below market, usually with short-term financing. Rehab it to a rentable (and appraisable) standard. Rent it to a qualified tenant so it shows income. Refinance into a long-term mortgage based on the new, higher appraised value. Repeat with the cash the refinance returns.
The refinance is the hinge. A cash-out refinance at 75% loan-to-value on the after-repair appraisal is what releases your capital — so the appraisal, and the rehab that drives it, decide whether BRRRR works.
The math that makes or breaks it
Add your purchase, rehab, holding, and closing costs — that is your all-in. The refinance returns roughly 75% of the appraised ARV. If all-in is at or below that number, you pull most or all of your cash back out and the deal is a home run. If all-in is well above it, you leave money 'stuck' in the deal.
The second test is cash flow: after the new mortgage payment, taxes, insurance, vacancy, and maintenance, the rent still has to leave a monthly cushion. A deal that recycles your capital but bleeds every month is not a win.
Risks to watch
Appraisals can come in low, leaving more cash trapped than you planned. Interest rates at refinance may be higher than when you bought. And rehab overruns hit BRRRR twice — once on cost, once on the timeline you carry the short-term loan.
Underwrite conservatively: assume a slightly lower appraisal and a slightly higher rate than today, and confirm the deal still returns most of your capital and cash-flows.
Run your own numbers
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