The BRRRR strategy (Buy, Rehab, Rent, Refinance, Repeat) represents one of the most effective methods for building real estate wealth while recycling capital. This approach allows investors to scale portfolios rapidly while maintaining cash flow and building equity.

BRRRR Strategy Overview

BRRRR investing involves purchasing distressed properties, improving them to market standards, establishing rental income, refinancing to recover invested capital, and repeating the process with recovered funds.

The Five BRRRR Steps

Buy: Acquire properties below market value with improvement potential. Focus on properties with strong fundamentals in desirable rental markets.

Rehab: Complete improvements that maximize property value and rental income potential. Focus on improvements that provide highest ROI: kitchens, bathrooms, flooring, and curb appeal.

Rent: Establish market-rate rental income with quality tenants. Document rental income for subsequent refinancing process.

Refinance: Use DSCR loans to recover 70-80% of invested capital based on improved property value and rental income.

Repeat: Deploy recovered capital into next BRRRR opportunity while maintaining cash flow from previous acquisitions.

Financing the BRRRR Process

Initial acquisition often requires bridge loans, hard money, or cash purchases to move quickly on distressed properties. The refinance component typically utilizes DSCR loans based on stabilized rental income.

Bridge to DSCR Strategy

Bridge loans provide quick acquisition capital for 6-18 months while completing improvements and establishing rental income. DSCR take-out financing provides permanent 30-year amortization.

Property Selection Criteria

Successful BRRRR properties share common characteristics: below-market purchase prices, improvement potential, strong rental markets, and clear path to market-rate refinancing.

The 1% Rule Application

Target properties where monthly rent equals or exceeds 1% of total invested capital (purchase + improvements). This ensures adequate cash flow to support DSCR refinancing.

Refinancing Considerations

DSCR refinancing requires 6-12 months of rental income history and often requires new appraisal reflecting improvements. Plan for 75-80% LTV on improved value with 6-month income verification.

Cash Recovery Analysis

Successful BRRRR deals recover 70-90% of invested capital through refinancing while maintaining positive cash flow. This recovered capital funds subsequent acquisitions without requiring additional out-of-pocket investment.

Scaling Your BRRRR Portfolio

As portfolio grows, consider blanket refinancing options that consolidate multiple properties under single loan structures. This can improve overall leverage and simplify management while reducing transaction costs.