BRRRR Method
Buy, Rehab, Rent, Refinance, Repeat — a strategy to recycle capital into multiple rental properties.
Definition
BRRRR stands for Buy, Rehab, Rent, Refinance, Repeat. It's a real estate investing strategy that allows investors to recycle their capital by pulling out most (or all) of their initial investment after a refinance, then deploying that capital into the next deal.
The process: (1) Buy a distressed property below market value. (2) Rehab it to increase the after-repair value. (3) Rent it to stabilize cash flow and demonstrate income to lenders. (4) Refinance based on the new appraised value, extracting most of your invested capital. (5) Repeat with the returned capital.
The BRRRR method works best when you can force substantial appreciation through renovation, buy at a significant discount to ARV, and refinance at 75–80% LTV. The goal is a 'perfect BRRRR' where you pull out 100% of your invested cash — leaving yourself with a cash-flowing rental property with no money left in the deal.
Risks include cost overruns during rehab, appraisals coming in lower than expected, extended vacancy, and rising interest rates reducing the refi proceeds. Always underwrite conservatively with a buffer for each of these variables.
Related Terms
Refinance
Replacing an existing loan with a new loan — often to access equity, lower the rate, or change loan terms.
After Repair Value (ARV)
The estimated market value of a property after all renovations are completed.
Rehab Costs
The total estimated cost to renovate a property, including materials, labor, permits, and contingencies.
Loan-to-Value (LTV)
The ratio of a loan's balance to the property's appraised value, expressed as a percentage.
Cash-on-Cash Return
Annual pre-tax cash flow divided by total cash invested, expressed as a percentage.
Buy-and-Hold
An investment strategy of purchasing property and holding it long-term for rental income and appreciation.
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