BRRRR Real Estate Strategy

Buy, rehab, rent, refinance, repeat to scale rental portfolio with less capital

Startup Cost
$40,000-$100,000
Difficulty
Advanced
Time to Profit
8-15 months
Profit Potential
$10,000-$42,000/month

Overview

BRRRR investors recycle capital buying distressed rentals, renovating, renting, and refinancing to pull invested capital back out.

Successfully executing BRRRR can acquire property with little to no money left in deal.

Strategy involves buying distressed property below market (70-80% of ARV), renovating to rental condition ($15,000-$50,000 typically), renting to quality tenant (ideally 1% rule), refinancing at 75-80% of new appraised value (cash-out refinance), repeating process recycling capital.

Successful BRRRR investors buy at significant discounts, accurately estimate rehab costs, achieve strong appraised values post-renovation, get 75-80% cash-out refinances, and maintain cash flow after refinancing.

Goal is pulling invested capital back out leaving rental with positive cash flow.

Can repeat 1-3 times per year building portfolio faster than traditional buy-and-hold.

Requires understanding renovations, working with lenders offering cash-out refinances, and buying at deep enough discounts.

Most challenging part is finding deals that pencil (buy price + rehab + refinance leaving positive cash flow).

Required Skills

  • Property Analysis
  • Renovation Management
  • Real Estate Finance
  • Deal Finding
  • Tenant Placement
  • Refinancing

Pros and Cons

Pros

  • Scale rental portfolio faster recycling capital
  • Build equity and cash flow simultaneously
  • Forced appreciation through renovations
  • Can do 2-4 deals per year with same capital
  • Learn multiple real estate skills

Cons

  • Complex strategy requiring multiple skills
  • Risk if appraisal comes in low (capital stuck)
  • Renovation overruns can kill deal profitability
  • Need lenders offering cash-out refinances
  • Market dependent on finding discounted properties

How to Get Started

  1. Master buy-and-hold and house flipping fundamentals
  2. Find lenders offering cash-out refinances (75-80% LTV)
  3. Source distressed rental properties at discount
  4. Buy at price allowing BRRRR to work (70-80% ARV)
  5. Renovate to rental condition efficiently
  6. Place quality tenant at 1% rule rent
  7. Refinance pulling capital out and repeat

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