The BRRRR Method: A Step-by-Step Guide for Investors

The BRRRR method is a real estate strategy for building a rental portfolio by reusing the same capital: Buy a property below its potential value, Rehab it, Rent it, Refinance it to pull your cash back out, and Repeat. Done well, one down payment can fund several rentals. This guide walks through each step and the BRRRR financing that makes it work.

What Is the BRRRR Method in Real Estate?

BRRRR real estate investing combines a fix and flip with a buy-and-hold rental. Instead of selling after the renovation, you keep the property, rent it out, and refinance based on its new, higher value. The refinance repays your short-term loan and, ideally, returns most of the cash you put in, which you use to buy the next property.

The 5 Steps of BRRRR

1. Buy

Look for properties priced below their after-repair value (ARV) because they need work. A common rule of thumb is to keep purchase plus rehab at or under about 75% of ARV, so the refinance can return your cash. Learn to estimate it in what is ARV in real estate.

2. Rehab

Renovate for rentability and appraisal value: kitchens, baths, roofs, systems and curb appeal. Keep a contingency of 10–15% of the budget. Short-term fix and flip loans can fund up to 90% of the purchase and 100% of the rehab.

3. Rent

Place a qualified tenant on a 12-month lease. A signed lease at market rent matters for the refinance, because DSCR lenders use the lower of the lease rent and the appraiser’s market rent.

4. Refinance

Refinance the short-term loan into a 30-year DSCR loan, qualified on the property’s rent instead of your income. At Lend Private Money the property needs a DSCR of at least 1.20x. Properties owned under 3 months are limited to 80% of total cost basis, and borrowers with fewer than 5 rentals take an extra 5% LTV haircut between 3 and 6 months, so plan your timeline.

5. Repeat

Use the cash returned at refinance for your next down payment. Once you own five or more rentals, consider one rental portfolio loan.

BRRRR Example

Illustrative only.

• Buy: $160,000 · rehab $40,000 · total cost $200,000
• Fix and flip loan: 90% of purchase ($144,000) + 100% of rehab ($40,000) = $184,000. Cash in: $16,000 plus closing costs
• ARV after rehab: $270,000 · rent $2,300 a month
• Cash-out refinance after 6+ months of ownership at 75% LTV (720+ FICO): $202,500, which pays off the $184,000 and returns about $18,500 before closing costs. Refinancing within 3 months would be capped at 80% of total cost ($160,000), which isn’t enough to repay the loan, so timing matters.

BRRRR Loans: Financing Each Stage

BRRRR Risks to Plan For

• Low appraisal. If the ARV comes in short, less cash comes back at refinance.
• Rehab overruns eat the equity you need.
• Rent too low for a 1.20x DSCR at today’s rates. Run the numbers before you buy, including taxes, insurance and HOA.
• Seasoning rules can cap the refinance if you move too fast.

BRRRR Method FAQs

What does BRRRR stand for?

Buy, rehab, rent, refinance, repeat. It’s a strategy for growing a rental portfolio by recycling the same capital.

What loans are used for BRRRR?

Usually a short-term fix and flip or hard money loan to buy and renovate, then a long-term DSCR rental loan to refinance and hold.

How soon can I refinance after the rehab?

It depends on the lender’s seasoning rules. At Lend Private Money, properties owned under 3 months are limited to 80% of total cost basis, and borrowers with fewer than 5 rentals take an extra 5% LTV haircut between 3 and 6 months.

Do I need a tenant to refinance?

A signed lease helps you qualify, because DSCR is based on the lower of the lease rent and the appraised market rent.

Related guides and tools: DSCR loans in Florida · Hard money loan calculator · Hard money lending explained

Planning your first BRRRR? Talk to a loan specialist at 407-401-8790 or apply now.