Guides · 2 minute read

BRRRR method basics

Buy, rehab, rent, refinance, repeat: how the strategy works and where it breaks.

BRRRR stands for buy, rehab, rent, refinance, repeat. The idea is to buy a distressed property below its potential value, improve it, rent it out, and then refinance based on the new, higher value so you can pull most or all of your cash back out and do it again.

The five steps

  1. Buy a property that needs work, usually with cash, a short-term loan or hard money.
  2. Rehab it so it rents well and appraises higher.
  3. Rent it to a qualified tenant. Most lenders want to see the property stabilized.
  4. Refinance into a long-term loan based on the new appraised value. This is the cash-out refinance.
  5. Repeat with the money you recovered.

A simple example

You buy a house for $140,000 and spend $40,000 on repairs, plus about $8,000 in closing, financing and holding costs: $188,000 all-in. After the rehab it appraises at $250,000. A lender offering a cash-out refinance at 75% of value would lend $187,500. That is almost exactly your all-in cost, so nearly all your cash comes back, and you own a rental with a new loan. If instead it appraised at $215,000, 75% is only $161,250 and you would leave about $27,000 in the deal.

The loan limit and waiting period vary by lender and loan type. A common structure is a maximum loan of about 70% to 75% of the appraised value and a seasoning period of several months before you can refinance. Confirm current terms with your lender instead of relying on a rule of thumb.

Where BRRRR goes wrong

  • The appraisal comes in below your after-repair estimate, so you cannot recover your cash.
  • The rehab runs over budget or takes longer, and holding costs (interest, taxes, insurance, utilities) pile up.
  • The new loan has a higher rate than your plan assumed, which cuts into cash flow.
  • The rent is lower than expected, so the property does not support the new mortgage.
Test the refinanced propertyEnter the after-repair value as the price and your refinance loan terms to see whether the rental cash flows.

How to test a BRRRR deal before you buy

Work backwards. Estimate the after-repair value from recent comparable sales, not from hope. Multiply by the lender’s loan limit to get the expected refinance amount, then compare it with your all-in cost. Finally, check that the rent covers the new mortgage payment plus expenses with room to spare. If the deal only works with a perfect appraisal, it does not work.

Common questions

What does BRRRR stand for?

Buy, rehab, rent, refinance, repeat.

Can you really get all your money back with BRRRR?

Sometimes. It works when the after-repair appraisal is high enough that the lender’s loan covers your total cost. Many deals leave some cash in the property, and appraisal and rehab surprises can leave a lot more.

How long do you have to wait to refinance?

It depends on the lender and loan type. Many require several months of ownership or a lease in place before a cash-out refinance, so ask your lender about their seasoning rules.

Is BRRRR good for beginners?

It has more moving parts and more risk than a simple purchase, because you need accurate repair estimates, a reliable contractor and a refinance lender. Many beginners start with a move-in-ready rental first.

Educational content, not investment, tax, legal or lending advice. Last updated .