The BRRRR Method Explained

BRRRR is an acronym for a real-estate investing strategy that has become popular with buy-and-hold landlords: Buy, Rehab, Rent, Refinance, Repeat. Its appeal is the ability to pull most of your original cash back out of a deal and use it again — in theory building a rental portfolio without needing a fresh down payment each time.

The five steps

• Buy — purchase a distressed property below market value, usually with cash or a short-term loan.
• Rehab — renovate to force appreciation and make it rentable.
• Rent — place a tenant so the property generates income.
• Refinance — do a cash-out refinance based on the new, higher appraised value.
• Repeat — use the cash you pulled out as the down payment on the next property.

Why the numbers have to work

The whole strategy hinges on buying and renovating for meaningfully less than the after-repair value (ARV). A common guideline is the 70% rule: pay no more than 70% of ARV minus repair costs. If you overpay or the rehab runs over budget, the refinance won't return enough cash and you'll leave money trapped in the deal.

The risks

BRRRR concentrates several risks at once: renovation overruns, a lower-than-expected appraisal, rising interest rates on the refinance, and vacancy. Because you refinance into a larger loan, your monthly cash flow is thinner than a straight rental purchase. It rewards investors who underwrite conservatively and have reserves — and punishes optimistic math.

Run your own BRRRR numbers, including cash-on-cash return and cap rate, with the calculators below.