What BRRRR Stands For
BRRRR is an acronym for Buy, Rehab, Rent, Refinance, Repeat. It describes a real estate investment strategy that allows you to recycle the same pool of capital across multiple property acquisitions, building a portfolio of cash-flowing rentals without needing fresh funds for every deal. Each completed BRRRR cycle adds a property to your portfolio while returning most or all of your invested capital for the next acquisition.
Why BRRRR Is the Fastest Way to Scale
Consider two approaches with $75,000 in available capital. With a conventional purchase strategy, you put 25% down on a $300,000 property. You now own one rental and your capital is fully deployed. To buy a second property, you need another $75,000, which could take years to save.
With BRRRR, that same $75,000 funds a distressed property purchase (hard money covers 80% of acquisition) plus the rehab budget. After renovation and tenant placement, you refinance into a DSCR loan. If you bought right, the refinance returns your $75,000 in full. Three months later, you do it again. In 12 months, you could complete 3 to 4 cycles, owning 3 to 4 properties with the same starting capital.
Over three years, a conventional approach yields 1 property. An efficient BRRRR execution yields 8 to 12 properties from the same $75,000. This velocity of money, how quickly your capital turns over and generates returns, is what makes BRRRR the fastest path to a meaningful rental portfolio.
Step-by-Step BRRRR Walkthrough
The following walkthrough uses a real deal example: a single-family home purchased for $200,000, with a $60,000 rehab budget, a projected ARV of $350,000, and expected rent of $2,400 per month.
Step 1: Buy — Finding and Financing the Deal
BRRRR deals come from multiple sourcing channels: the MLS (look for REO and short sale listings), wholesalers, auctions, driving for dollars in target neighborhoods, and direct mail campaigns to distressed property owners. The key filter is the 70% rule: your maximum offer should not exceed ARV multiplied by 70% minus estimated rehab cost.
For this example: $350,000 ARV times 70% minus $60,000 rehab equals $185,000 maximum offer. We are paying $200,000, which is slightly above the rule. This is acceptable when comparable sales strongly support the ARV and the rental income produces a healthy DSCR.
Financing comes from a hard money lender at 80% LTV: $160,000 loan. The investor brings $40,000 in cash for the down payment plus $60,000 from reserves for the rehab budget. Total cash required: $100,000.
Step 2: Rehab — Adding Value Efficiently
The renovation budget breaks down as follows: kitchen update at $15,000, two bathroom renovations at $12,000 combined, flooring throughout at $10,000, interior and exterior paint at $8,000, HVAC replacement at $10,000, and a $5,000 contingency reserve, totaling $60,000.
Focus rehab spending on improvements that move the appraisal needle: kitchens, bathrooms, and overall condition are the primary value drivers. Manage the timeline tightly because every month on hard money at 12% costs approximately $1,600 in interest on a $160,000 balance. A 4-month rehab costs $6,400 in carry; a 6-month rehab costs $9,600.
Step 3: Rent — Generating Income
Conduct a market rent analysis using comparable rental listings and recent lease comps in the area. This property rents at $2,400 per month. Screen tenants thoroughly: verify credit, confirm income at three times the monthly rent minimum, check references from previous landlords, and run a background check. Execute a 12-month lease to satisfy lender requirements for the refinance.
Step 4: Refinance — Recovering Your Capital
This is the step where BRRRR either works or does not. Apply for a DSCR loan once the property is stabilized and the seasoning period has passed. The appraiser evaluates the renovated property and confirms an ARV of $350,000.
New loan amount: $350,000 times 75% LTV equals $262,500. This loan pays off the $160,000 hard money balance. Cash out at closing: $102,500. Total cash the investor put in: $40,000 down payment plus $60,000 rehab equals $100,000. Cash returned: $102,500.
The result is full capital recovery plus $2,500 extra. The property now generates approximately $200 to $400 per month in cash flow while the investor has recovered every dollar of their original investment. Use the refinance calculator to model your own deal.
Step 5: Repeat — Compounding Your Portfolio
The $102,500 in recovered capital goes directly into sourcing and funding the next BRRRR deal. Over a 12-month period, an efficient investor operating in an active market can complete 3 to 4 full BRRRR cycles. Year one: 3 properties. Year two: 6 properties. Year three: 10 or more. Each property generates monthly cash flow while appreciating and having its mortgage paid down by tenants.
Model your BRRRR deal before you make an offer.
Open the Calculator →BRRRR Deal Analysis: Underwriting Before You Buy
The math must work on paper before you write an offer. Calculate these metrics for every potential BRRRR deal: your acquisition discount relative to ARV (target 65-75% of ARV minus rehab), the projected DSCR after refinance (must be 1.0 or above for loan qualification), your cash recovery percentage (target 100%), and the monthly cash flow after permanent financing is in place.
The most common BRRRR failure is buying a property that looks good on paper but does not appraise at your projected ARV. Before you make an offer, pull recent comparable sales yourself and confirm at least 3 sold comps within half a mile support your target value. If the comps require justification or explanation, your ARV is too aggressive.
Financing the BRRRR Acquisition
Several funding sources can finance the buy step of BRRRR. Hard money loans are the most common choice, offering 70-90% LTV with closings in 7 to 14 days. Private money from individual lenders provides negotiable terms and often more flexibility on draws and extensions. Bridge loans from institutional lenders function similarly to hard money with sometimes lower rates for experienced borrowers. Self-directed IRA and 401K funds allow you to use retirement capital for real estate acquisitions, though with additional complexity and restrictions.
Common BRRRR Mistakes and How to Avoid Them
Overestimating ARV. Use only conservative comparable sales. Sold properties within half a mile and the last 6 months with similar size and condition. If you have to stretch for comps, your ARV is too high.
Underbudgeting rehab. Add a 10% to 15% contingency to every rehab budget. Unexpected issues like plumbing, electrical, or foundation problems can quickly consume your profit margin.
Ignoring DSCR before buying. If the property cannot generate a 1.0 DSCR at your target loan amount, the DSCR refinance will not work. Run the numbers at DSCRTool.com before you make an offer.
Slow rehab timelines. Every month of delay costs carry on the hard money loan. Set aggressive but realistic timelines and hold contractors accountable to milestones.
No exit plan. Know your refinance path before you close on the hard money. Identify your target DSCR lender, confirm you meet their requirements, and understand the seasoning timeline.