BRRRR, Step by Step: Buy, Rehab, Rent, Refinance, Repeat
BRRRR turns one pile of cash into a growing portfolio by recycling it from deal to deal. Here's each step and how it's financed.
Short answer
BRRRR stands for buy, rehab, rent, refinance, repeat. You buy a property below its potential, renovate it, rent it out, then refinance into a long-term loan based on the new value, pulling most of your cash back out to fund the next deal. The refinance is where the strategy succeeds or stalls.
Key points
- Buy below value and add value with the rehab.
- Rent it to support the long-term loan.
- Refinance to recover cash for the next deal.
The five steps
- Buy a property priced below what it'll be worth after work, often with cash or a short-term loan.
- Rehab it to rentable condition, adding value where the market rewards it.
- Rent it at market rent with a solid tenant and lease.
- Refinance into a long-term DSCR loan based on the new appraised value.
- Repeat with the cash you recovered.
Deal sheet: One BRRRR cycle, illustrative
| Amount | |
|---|---|
| Buy, cash | $200,000 |
| Rehab | $50,000 |
| Cash invested | $250,000 |
| Appraised value after rehab | $340,000 |
| Cash-out refinance, 75% | $255,000 |
| Cash back after $7,000 closing costs | $248,000 |
In this example the investor recovers almost all of the $250,000 and keeps a rental with a healthy DSCR; the full breakdown is in cash-out refinancing on a rental.
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Where BRRRR deals stall
- The appraisal comes in low, shrinking the refinance; see appraisal came in low.
- Seasoning rules cap the loan at cost for the first months of ownership.
- Rent doesn't cover the bigger payment, so DSCR limits the loan.
- The rehab runs long, and short-term interest eats the margin.
Financing each step
Purchases and rehabs are often funded with cash or a fix-and-flip or bridge loan; see fix-and-flip financing. The refinance is typically a DSCR loan, which qualifies on rent rather than your income.
Frequently asked questions
What does BRRRR stand for?
Buy, rehab, rent, refinance, repeat: a strategy for recycling the same capital across several rental properties.
How long do I have to wait to refinance a BRRRR property?
It depends on the lender's seasoning rules. Some use the new appraised value after a few months; others cap the loan at your costs until a longer period passes.
Can I BRRRR with a DSCR loan?
Yes. DSCR loans are a common choice for the refinance step because they qualify on the property's rent.
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