Are you ready to revolutionize your real estate investing journey? Get excited, because you’re about to dive into the game-changing BRRRR strategy.
This powerful method has helped countless investors build impressive portfolios with minimal cash investment.
Whether you’re a seasoned pro or just starting out, the insights you’re about to discover will equip you with the knowledge to take your real estate game to the next level.
Get ready to explore the ins and outs of BRRRR – it’s time to turn your real estate dreams into reality.
BRRRR: Buy, Rehab, Rent, Refi, Repeat

The BRRRR strategy is a powerful real estate investing method that can help you build a portfolio of rental properties with minimal cash investment. Let’s break down each step of this strategy:
- Buy – You start by purchasing a property at a significant discount, typically 70-75% of its After Repair Value (ARV). This often means looking for distressed or undervalued properties that need work.
- Rehab – Next, you renovate the property to increase its value. This step is crucial as it not only improves the property’s condition but also its potential rental income and overall value.
- Rent – Once the property is in good condition, you rent it out to tenants. This step begins to generate cash flow and demonstrates to lenders that the property is a viable investment.
- Refinance – After the property has been rented for a period (usually 6-12 months), you refinance it based on its new, higher value. The goal is to pull out most or all of your initial investment.
- Repeat – With the cash from the refinance, you can now start the process over with a new property, potentially growing your portfolio without investing additional personal funds.
The BRRRR strategy can be a game-changer for your real estate investing journey, but it requires careful planning, market knowledge, and the ability to find great deals. As with any investment strategy, it’s crucial to do your due diligence and understand the risks involved.
BRRRR Variations
Ready to dive into the exciting world of BRRRR investing? Let’s explore the different variations that can supercharge your real estate portfolio:
- Traditional BRRRR – This is the classic approach where you buy a property, renovate it, rent it out for long-term tenants, refinance, and then repeat the process. It’s a great way to build a portfolio of cash-flowing properties.
- BRRRR to Short-Term Rentals – Instead of long-term tenants, you convert your BRRRR property into a short-term rental. This can potentially yield higher returns, especially in tourist-heavy areas or cities with frequent business travelers.
- Property Type Variations – BRRRR isn’t limited to single-family homes. You can apply this strategy to duplexes, triplexes, fourplexes, and even small apartment buildings. Each property type offers unique advantages and challenges.
- Local vs. Remote BRRRR – You’re not limited to your local market because you’re not typically moving into the properties like you would with house hacking or the Nomad™ real estate investing strategies. BRRRR allows you to invest in properties across the country, opening up opportunities in markets with better deals, more plentiful deals and/or higher potential returns.
- BRRRR for Other Property Types – While less common, you can apply the BRRRR strategy to commercial, industrial, or retail properties. This variation requires more specialized knowledge but can lead to significant returns.
Financing BRRRR
Let’s look at some of the more common ways to financing BRRRR deals as well as some of the less common, more unusual ways to finance BRRRR deals.
Remember, with BRRRR we’re often financing the property twice: first to acquire the property where we can add value and then, after we’ve added value, refinancing it to leave as little money in the deal as practically possible—and ideally no money in the deal at all.
Most Common Financing
Let’s dive into the most common ways to finance your BRRRR deals. Remember, you’ll typically need financing for both the initial purchase and the subsequent refinance. Here’s what you need to know:
- Hard Money Loans – These are short-term loans often used for the initial purchase and rehab. They’re great for quick closings but come with higher interest rates. For Traditional BRRRR, you’ll use these for the “Buy” and “Rehab” stages. With BRRRR to Short-Term Rentals, you might need a larger loan to cover furnishing costs.
- Private Money – Similar to hard money, but from individual investors. Hard money loans are from lenders who are in the business of making loans; private money loans are from friends and family not in the business of making loans. Terms can be more flexible, which is helpful if you’re BRRRRing and need additional flexibility. You might use private money for both the initial purchase, rehab, and furnishing the property if you’re converting it to a short-term rental.
- Traditional Non-Owner-Occupant Loans – These are typically used for the refinance stage. You’ll likely need to wait 6-12 months after purchase before refinancing unless you find a lender with a special program that caters to BRRRR investors.
- Cash – If you have the funds, buying with cash can give you an edge in competitive markets. This works for all BRRRR variations and property types. After rehab and establishing rental income, you can do a cash-out refinance to recoup your investment.
While financing twice in BRRRR deals can help you leave little money in the deal, it’s important to note that this approach does come with significant costs that can eat into your equity. The expenses associated with two rounds of financing, including closing costs and potential higher interest rates, can impact your overall returns.
However, BRRRR isn’t the only strategy for acquiring rental properties with minimal upfront investment. You might also consider house hacking, the Nomad™ method, or various creative financing strategies. These alternatives can help you build your real estate portfolio while minimizing your initial cash outlay, each with its own unique advantages and considerations.
More Unusual Methods
While traditional financing methods are common for BRRRR deals, some less conventional approaches can help you acquire properties with minimal upfront capital. Let’s explore a few of these creative financing options:
- Owner Financing – In this scenario, the property seller becomes the lender. You make payments directly to them rather than a bank. This approach is particularly useful for BRRRR deals involving properties that might not qualify for traditional financing due to their condition. Depending on how you structure the owner financing, you have two options: leave the owner financing in place (which technically isn’t BRRRR since you’re not refinancing), or refinance into more permanent, long-term traditional financing after completing repairs and securing tenants. This method works for various property types, from single-family homes to small apartment buildings. Utilizing owner financing during the rehab and rent period can save you from getting an expensive hard money loan.
- Subject-To Financing – This method involves taking over the seller’s existing mortgage payments without formally assuming the loan. It’s a clever way to acquire property without qualifying for a new loan. Like owner financing, you have two options: keep the seller’s existing financing (which isn’t technically BRRRR since you’re not refinancing) or refinance the property after completing repairs and securing tenants. If you choose to refinance, you’d typically use long-term, traditional financing. This approach can potentially save you from resorting to an expensive hard money loan.
- Wrap Financing – This creative financing method involves “wrapping” a new loan around the seller’s existing mortgage. It’s similar to subject-to financing, but with a key difference: the seller retains the right to foreclose if you default on payments. You pay the seller, who then continues to pay their original mortgage. This approach offers flexibility similar to subject-to financing, potentially helping you avoid expensive hard money loans during the initial stages of your BRRRR project.
Remember, these creative financing methods can be applied to various BRRRR scenarios, whether you’re focusing on long-term rentals or short-term vacation properties. They can also be useful when investing in different property types or exploring remote markets where traditional financing might be challenging to secure.
Holding
Let’s talk about holding BRRRR properties.
First, how active or passive is investing in BRRRR properties? And then, how long do you typically hold BRRRR properties?
Active/Passive
When it comes to BRRRR investing, you’re looking at a strategy that’s more on the active side of the real estate investing spectrum. Here’s why:
- Initial Intensity – The early stages of BRRRR are particularly hands-on. You’re actively involved in finding a property, managing the rehab process, and navigating the refinancing phase.
- Transition to Passive – Once you’ve completed the initial stages and secured long-term financing, your BRRRR property starts to resemble a traditional buy-and-hold investment or a short-term rental, depending on your chosen path.
- Ongoing Management – Even after the transition, you’ll need to actively manage the property or oversee a property management company, especially if you’ve opted for the short-term rental route.
Duration
When it comes to BRRRR (Buy, Rehab, Rent, Refinance, Repeat) properties, the holding period is typically quite long. In theory, you could hold onto these properties indefinitely, treating them as long-term investments in your real estate portfolio.
However, the reality is often more nuanced.
Here’s what you need to know about holding periods for BRRRR properties:
- Long-term investment – Many investors plan to hold BRRRR properties for extended periods, often 10 years or more. This allows you to benefit from long-term appreciation and ongoing rental income.
- Leveraging equity – Some savvy BRRRR investors choose to leverage the equity they’ve built up in their properties. You might refinance or take out a home equity loan to fund the purchase of additional properties, potentially accelerating your portfolio growth.
- Portfolio simplification – As you approach retirement, you might decide to simplify your real estate holdings. This could involve selling some of your BRRRR properties to focus on a smaller number of high-performing assets.
- Transitioning strategies – In some cases, you might choose to exit the BRRRR strategy entirely. This could mean selling all your properties to invest in more passive real estate options or diversifying into other investment vehicles.
You might find yourself regularly evaluating whether to hold onto the property or sell it to reinvest the equity you’ve built. This decision is more common with BRRRR properties where you’ve captured forced appreciation through the rehab. It’s especially relevant since BRRRR properties aren’t always ideal long-term rentals; sometimes you buy them simply because you can acquire them and leave little money in the deal after refinancing. If you were choosing a property exclusively for long-term rental potential, you might not have selected this particular property.
Because of this BRRRR investors find themselves considering selling their BRRRR properties and re-allocating their capital into more ideal long-term rentals slightly more than those buying properties solely based on their rental characteristics to begin with.
Exit
In theory you’d hold onto your BRRRR properties forever and utilize their cash flow to achieve financial independence. But the reality is more nuanced and you might find yourself wanting to sell the properties as we previously discuss.
If you were to sell your BRRRR properties, what are the most common channels for selling them? And how will your buyers typically finance the purchases?
Exit Channels
Let’s explore your options if you decide to part ways with your BRRRR property:
- Multiple Listing Service (MLS) – This is your go-to option for maximum exposure. By listing your property on the MLS, you’re tapping into a vast network of real estate agents and potential buyers. It’s like casting the widest net possible to catch the best offer.
- For Sale By Owner (FSBO) – If you’re feeling confident in your sales skills, you might consider the FSBO route. This approach can save you money on real estate agent commissions, but remember, it requires more time and effort on your part. You’ll be responsible for marketing, showing the property, and negotiating deals.
- Auction – While less common for individual BRRRR properties, auctions can be an effective way to sell quickly. They create a sense of urgency among buyers and can sometimes result in higher prices due to competitive bidding. However, they also come with the risk of selling below market value if bidding is low.
Exit Financing
Next, let’s explore the most common financing methods your potential buyers might use:
- Never sell – Many successful BRRRR investors choose to hold onto their properties indefinitely. This approach allows you to benefit from long-term appreciation and ongoing rental income.
- Traditional Owner-Occupant Loans – If you’re selling to someone who plans to live in the property, they might use conventional mortgages, FHA loans, or VA loans. These often come with lower down payments and better terms for the buyer.
- Traditional Non-Owner-Occupant Loans – When selling to another investor, they’ll likely use these loans. They typically require a 20-25% down payment and have slightly higher interest rates than owner-occupant loans.
- Cash – Some buyers, especially experienced investors, might offer cash. This can lead to a faster, smoother closing process, which could be advantageous for you as the seller.

Investor/Entrepreneur
When it comes to real estate investing, you’ll find that strategies fall on a spectrum between Real Estate Investing and Real Estate Entrepreneurial approaches. Let’s break this down:
Real Estate Investing typically involves primarily putting your money to work. You’re looking for a return on your financial investment, often with minimal time commitment. Think of buying a property and hiring a property manager to handle day-to-day operations.
On the other hand, Real Estate Entrepreneurial strategies require a significant investment of your time, along with some money. Here, you’re aiming for a return on both your time and financial investment. This is where BRRRR (Buy, Rehab, Rent, Refinance, Repeat) comes into play.
BRRRR is a prime example of a Real Estate Entrepreneurial strategy, especially in its early stages. Here’s why:
- Time Investment – You’ll spend considerable time finding undervalued properties, overseeing renovations, and securing tenants.
- Double Financing – You’ll navigate two rounds of financing: initial purchase and post-renovation refinancing. This requires time, effort, and financial savvy.
- Sweat Equity – Your time and effort in the rehab process directly contribute to increasing the property’s value.
- Active Management – During the renovation and initial rental period, you’ll likely be hands-on with property management.
The goal of BRRRR investors is to convert their time and effort into captured equity. By forcing appreciation through renovations and refinancing, you’re essentially creating value with your entrepreneurial efforts.
Remember, while BRRRR starts out highly entrepreneurial, it can transition to a more passive Real Estate Investing approach once you’ve stabilized the property and potentially hired a property manager. This flexibility is part of what makes real estate investing so appealing!
Money Required
How much money is required to utilize the BRRRR strategy and what do you typically use it for? And, what are some of the less common, more unusual uses of money when BRRRRing?
Most Common
Let’s break down the most common money requirements:
- Little or nothing down with hard money/private money – This is often your ticket to entry. Hard money or private money lenders can finance your initial purchase and rehab costs, allowing you to get started with minimal cash out of pocket. In an ideal world, you’d leave no money in the deal. However, it is more common to leave something in the deal—often 5-10% of the value of the property.
- Rehab costs – This is where you create value. Your rehab budget covers everything from major renovations to minor cosmetic updates. These costs may be financed initially with hard money loans and then refinanced out later. Or, you may choose to fund the rehab costs with your own cash or credit.
- Closing costs – You’ll likely face closing costs twice: once for your initial purchase and again when you refinance. These can include appraisal fees, title insurance, and lender fees. Budget for about 2-5% of the loan amount for each transaction but these can vary from market to market and lender to lender.
- Rent ready costs – In addition to your rehab costs, there may be additional things to prepare the property for rent. If you’re going to BRRRR into a short-term rental this might include furnishing the property.
- Cumulative negative cash flow – This is a crucial consideration in BRRRR investing. You might experience negative cash flow initially, especially if you’re using higher-interest hard money loans. Set aside the total, cumulative amount of negative cash you’re likely to see until rents rise up enough and cash flow is positive. Here’s why:
- Negative cash flow is really deferred down payment. If you put more down, you wouldn’t have negative cash flow. Since you’re often trying to minimize the amount you put down with BRRRR properties there is an increased chance of having negative cash flow (also known as deferred down payment).
- The interest rates on hard money loans while you’re rehabbing and waiting to refinance into better interest rate, long-term financing make it more difficult to positive cash flow until after you’re refinanced.
- Finding deals that are both discounted and ideal rentals can be challenging. Finding properties to buy at a discount to fix up can be challenging. Adding in that they must also be a great rental once their fixed up, narrows the number of properties that could be used for BRRRR. Often the properties you can buy at a deep discount aren’t ideal for long-term rentals and optimized for cash flowing. This increases the chance you’ll see some negative cash flow.
- While buying at a discount and rehabbing helps, remember that refinance interest rates are often higher than purchase money mortgages. With strategies like buy and hold, house hacking, and Nomading™, you can often be more selective and find better cash flow deals from the start. And, buy them with slightly better purchase money mortgage interest rates as well.
- Keep in mind, there are exceptions to this. Every market and deal is unique.
- Reserves – Set aside money for unexpected repairs, vacancies, or market downturns. A good rule of thumb is to have at least 6 months of expenses saved as reserves for each property.
Less Common
Let’s explore a few of the less common money requirements when utilizing BRRRR:
- All-cash purchase – If you have the funds available, buying a property outright can give you a significant advantage in competitive markets. After completing the rehab and establishing rental income, you can do a cash-out refinance to recoup your investment. This will also help with cash flow before your refinance compared to higher interest rate hard money loans.
- Larger down payment – While the BRRRR strategy typically aims to minimize your initial investment, putting more money down upfront can sometimes lead to better loan terms and lower interest rates. This approach might be beneficial if you’re looking to maximize cash flow from the start.
- 100% financing with hard money or private money – Some hard money lenders or private investors might be willing to finance the entire purchase price and renovation costs. While this can be an attractive option for investors with limited capital, be prepared for higher interest rates and shorter loan terms.
The ideal scenario in BRRRR investing for many investors is to leave no money in the deal after refinancing. However, in many real estate markets, it’s more realistic to expect to leave about 5% to 10% of the property’s value in the deal. This still allows for significant leverage and the potential for strong returns on your investment.
Credit Required
When it comes to credit requirements for the BRRRR strategy, you’re looking at a two-stage process: the initial purchase and then the refinance.
Let’s break it down:
For the initial purchase, you can often secure a hard money loan. These lenders are often more concerned with the property’s potential than your credit score. However, many hard money lenders will still look at you and your credit as the borrower.
The real credit requirement often comes during the refinance stage. This is where you’ll typically need to qualify for traditional “Investor Financing.”
Here’s what you need to know:
- Credit Score Requirement – The magic number is usually around 640. This is the typical minimum score lenders look for when considering you for a refinance.
- Exceptions Exist – Some lenders offer more unusual loan products that might accept lower scores. These often come in the form of Adjustable-Rate Mortgages (ARMs) or loans with higher interest rates. These can introduce new and, in many cases, more significant risks.
- Better Credit, Better Terms – If your credit score is well above 640, you’re likely to secure more favorable interest rates.
- Refinance vs. Purchase Rates – Keep in mind that interest rates for refinances are typically higher than those for initial purchases. This is just one of those quirks of the lending world you’ll need to factor into your calculations.
Now, let’s look at some less common scenarios:
- Creative Lending – Some investors find success with lenders who offer more flexible terms. These might be local credit unions or private lenders who are willing to look beyond just your credit score.
- All-Cash Purchase – If you’re in the enviable position of buying with cash, your credit score becomes less relevant. However, you’ll still need to consider your credit for the eventual refinance.
Remember, the world of lending is always changing. What’s true today might not be true tomorrow. Always check with local lenders for the most up-to-date requirements.
Skills Required
Here are the primary skills required for BRRRR:
- Deal Analysis – You’ll need to evaluate properties not just for their current value, but for their potential after renovation.
- Rehab Estimating – Accurately estimating renovation costs is crucial. You’ll need to develop a good understanding of construction costs, timelines, and potential issues that may arise during renovations.
- Finding Discounted Deals that Also Cash Flow – This is the foundation of successful BRRRR investing. You’ll need to develop a keen eye for undervalued properties that have potential as rentals after renovation.
- Acquisition and Refi Financing – Understanding various financing options is key. You’ll need to be familiar with hard money loans, conventional mortgages, and refinancing processes.
- Rehab and/or Rehab Management – This skill can vary depending on your approach:
- Doing it yourself – You’ll need hands-on construction skills.
- Managing contractors – This requires project management skills and the ability to effectively communicate with tradespeople.
- Managing a general contractor – You’ll need to understand the renovation process to effectively oversee the project.
- Property Management – Your approach here can also vary:
- Managing long-term rentals yourself – You’ll need to understand tenant laws, maintenance, and financial management.
- Hiring a property management company – This requires the ability to select and oversee a reliable company.
- Doing short-term rentals – This involves understanding platforms like Airbnb, as well as local regulations and hospitality skills.
Stability
Ever wondered how stable your real estate investments are? Shane Parrish’s concept of active versus passive stability sheds light on this question, especially when it comes to the BRRRR (Buy, Rehab, Rent, Refinance, Repeat) strategy.
Let’s break it down:
- BRRRR is Very Actively Stable – This means you’ll need to be hands-on, especially during the initial stages. You’re not just buying a property; you’re actively improving it, finding tenants, and navigating the refinancing process.
- Real Estate Investing is Generally Actively Stable – Most real estate investments require ongoing attention. However, BRRRR takes this up a notch, particularly in its early phases.
- Short-Term Rentals are Even More Active – If you thought BRRRR was hands-on, short-term rentals dial it up further. You’re dealing with frequent tenant turnover and constant property management.
But here’s the interesting part: not all real estate strategies are created equal when it comes to stability. Some choices can make your investments more or less active:
- Amortizing Mortgages vs. Balloons and Interest-Only Loans – Opting for an amortizing mortgage? That’s a step towards passive stability. You won’t need to worry about refinancing or selling because a balloon payment comes due.
- Buy and Hold vs. Flips/Lease-Options/BRRRR – While still active, traditional buy and hold is your ticket to a more passively stable investment. Flipping properties is more active. Just like lease-options are more active. Just like BRRRR is more active.
- Retirement Funding: Cash Flow vs. Appreciation and Debt Paydown – Living off your rental income? That’s relatively passive. But if you’re banking on appreciation or debt paydown for retirement, you might find yourself more actively involved, potentially needing to sell or refinance to tap into those gains to live on.
Remember, while BRRRR starts off very actively stable, it can become more passive over time. Once you’ve refinanced and have long-term tenants in place, your day-to-day involvement typically decreases.
Scalability
When it comes to scaling your real estate portfolio, BRRRR (Buy, Rehab, Rent, Refinance, Repeat) offers a unique set of advantages and challenges compared to other strategies. Let’s dive into how BRRRR stacks up in terms of scalability:
- Capital Efficiency – BRRRR allows you to acquire properties with minimal money left in the deal. You might only leave 5% to 10% of the property’s value invested, compared to 20% or more with traditional buy and hold. This means you can potentially acquire more properties with the same amount of capital.
- Deal Flow Limitations – Finding properties that meet BRRRR criteria can be challenging. You need deals that are discounted, can be improved, and will cash flow as rentals. This often results in slower acquisition speed compared to other strategies.
- Time and Effort – BRRRR requires significant hands-on work, especially during the rehab phase. This time investment can limit how quickly you can scale your portfolio, as you’ll be actively involved in each project.
- Cash Flow Considerations – Properties acquired through BRRRR may not cash flow as well as those chosen purely for their rental potential. This could affect your ability to secure financing for future deals, potentially slowing your scaling efforts.
- Financing Flexibility – BRRRR allows you to recycle your capital through refinancing, potentially freeing up funds for your next deal. However, you’ll need to navigate two rounds of financing for each property, which can be time-consuming and eat into some of your equity.
- Market Dependence – The scalability of BRRRR can vary greatly depending on your local real estate market. In some areas, finding suitable properties might be easier, allowing for faster scaling.
Risk Exposure
Let’s dive into the risks associated with the BRRRR (Buy, Rehab, Rent, Refinance, Repeat) strategy. While it can be a powerful method for building your real estate portfolio, it’s crucial to understand and prepare for the potential pitfalls. Here’s what you need to know:
- High Overall Risk Rating – BRRRR comes with a significant risk profile due to its double risk exposure: you’re facing risks during the rehab phase and then again as a long-term rental property owner.
- Amplified Returns – The use of leverage in BRRRR can magnify both your gains and losses. While this can lead to impressive returns, it also means you have amplified losses if things don’t go as planned.
- Negative Cash Flow Risk – You might face an increased likelihood of negative cash flow, especially in the early stages. This is often due to:
- Small or no down payments, which lead to higher mortgage payments
- Limited selection of ideal cash-flowing properties, as you’re often prioritizing properties that you can buy at a discount and leave little in the deal versus optimal cash flow properties
- Slightly worse financing terms, including higher interest rates, which can eat into your cash flow
- Rehab Risks – Renovation projects can be unpredictable. You might uncover unexpected issues, face contractor delays, or encounter budget overruns that could significantly impact your profitability.
- Interest Rate Risk – If interest rates rise while you’re in the middle of a rehab, you could face higher costs when it’s time to refinance, potentially affecting your ability to pull out your initial investment.
- Market Volatility – There’s always a risk of property values declining during your ownership. This could impact your ability to refinance and pull out your initial investment, potentially leaving you with more money tied up in the deal than anticipated.
- Rent Fluctuations – If rental rates in your area decline, it could affect your cash flow and potentially your ability to cover your mortgage and other expenses.
- Credit Risk – Your credit score could be impacted if things don’t go as planned, especially if you’re leveraging multiple properties. This could affect your ability to secure financing for future deals.
- Property Management Challenges – Like any rental property, you’ll face the usual risks associated with tenants and property management, including potential damage to the property, non-payment of rent, or high turnover rates.
Profit Speed

When it comes to real estate investing, especially with the BRRRR (Buy, Rehab, Rent, Refinance, Repeat) strategy, understanding the different areas of return is crucial.
Let’s break it down into four primary areas and one secondary area.
The Four Primary Areas of Return
- Appreciation – This is the increase in your property’s value over time. With BRRRR, you get two types:
- Natural Appreciation: The gradual increase in property value due to market forces.
- Forced Appreciation: The value you add through renovations and improvements. In BRRRR, this is where you can see significant gains by buying at a discount and rehabbing.
- Cash Flow – This is the money left over after all expenses are paid. Your cash flow timeline with BRRRR might look like this:
- Initial Rehab Period: You likely won’t see positive cash flow during this time. In fact, with a hard money loan at a very high interest rate, it is likely to be negative.
- After Rehab and Tenant Placement: You should start seeing positive cash flow, typically within 6-12 months of purchase. But, this may be less than you’d see if you select a property purely for its cash flow characteristics and not because you could buy it at a discount to BRRRR.
- Debt Paydown – This is the portion of your mortgage that gets paid off over time. With BRRRR, your tenants are essentially paying down your mortgage for you.
- Tax Benefits – Real estate offers various tax advantages, including depreciation. Cash Flow from Depreciation™ can provide savings with each paycheck or at year-end, depending on how you structure it.
Don’t forget about the money you set aside for repairs and vacancies. While it’s not actively earning you money like the other areas, it’s still part of your investment and can earn interest.
Speed and Size of Returns in BRRRR
Here’s a breakdown of how quickly you might see returns and their potential size:
- Forced Appreciation – This can be substantial and quick. You might see a significant “paper” return as soon as your rehab is complete. You won’t be able to access this return until you sell or refinance.
- Cash Flow – Typically starts within 6 months, after rehab and refinancing. It’s usually a percentage of your invested amount, measured by metrics like Cash on Cash Return or Capitalization Rate.
- Debt Paydown – This builds slowly but steadily over time. Similar to appreciation, this is not easily accessed until you sell or refinance the property.
- Tax Benefits – These can start as soon as you start renting the property.
Finding Deals
Let’s look at the most common ways to find BRRRR deals and some of the more unusual, less common methods of finding BRRRR deals.
Most Common Methods
Ready to dive into the world of BRRRR investing? Let’s explore the most effective ways to find those hidden gems that can become your next profitable project. Here are the primary methods you’ll want to focus on:
- Multiple Listing Service (MLS) – This is often your first stop. The MLS is a goldmine of information, but you’ll need to dig deep to find a property you can both buy at a discount and that will cash flow well once you’ve fixed it up and refinanced it.
- For Sale By Owner (FSBO) – These are sellers not represented by a real estate agent and not marketing their property in the MLS. They come in two flavors:
- Actively Marketed – These are sellers that are actively marketing their property for sale (without a real estate agent).
- Hidden – These are sellers that would consider selling, but have not started to market their properties for sale.
- Marketing – You may need to put out marketing to find these hidden sellers.
- Networking – Or, find hidden sellers by networking and letting folks know you’re interested in buying properties.
- Wholesalers – Build relationships with local wholesalers. They often have access to off-market properties that could be perfect for BRRRR.
More Unusual Methods
Let’s dive into some unusual strategies that might just lead you to your next great BRRRR investment:
- Auctions – You’ll find properties at foreclosure auctions, IRS auctions, and even local government auctions. Be prepared to act fast and have your finances in order, as these often require quick decisions and cash purchases.
- Real Estate Owned (REOs) – These are properties that banks have foreclosed on and now own. They’re often eager to sell, which can translate to good deals for you. Build relationships with local banks and regularly check their REO listings.
- Tax Lien/Tax Deed/Tax Sales – When property owners fail to pay their taxes, local governments may auction off tax liens or the properties themselves. This can be a way to acquire properties at steep discounts, but it requires thorough research and understanding of the process in your area.
Remember, these strategies often require more legwork and due diligence than traditional methods. However, they can lead to unique opportunities that align perfectly with your BRRRR strategy.
Searching for Fixer Upper Deals
When you’re hunting for BRRRR opportunities in the Multiple Listing Service (MLS), you’re on a quest for the real estate equivalent of a diamond in the rough. You’re not just looking for any old property; you’re searching for a very specific combination of factors that can make your BRRRR property profitable in the short-term and long-term.
You’re essentially looking for two crucial elements:
- A deeply discounted property – This is a place you can buy for a discount, fix up, and then refinance to pull out as much of your initial investment as possible.
- A potentially great rental – After you’ve rehabbed it, this property needs to generate solid cash flow as a rental.
Finding a property that ticks both these boxes can be challenging.
Many investors, in their eagerness to get started, might let the second criteria slip.
You might hear them say, “If I can get a deal with nothing down, I’ll make it work as a rental somehow.” But remember, cash flow is important too even with the BRRRR strategy.
MLS Search Strategies
To uncover these hidden gems in the MLS, you’ll want to get creative with your search terms. Here are some keywords to include in your searches:
- Fixer-upper terms – Look for terms like “handyman special,” “fixer,” “TLC,” or “needs work.” These often indicate properties that could be bought at a discount.
- Problem indicators – Search for “mold,” “asbestos,” “damage,” “fire,” “smoke,” or “water damage.” While these issues can be serious, they often scare away less experienced buyers, potentially leaving opportunities for you.
Remember, these keywords are just the starting point.
You’ll need to dig deeper to ensure the property meets both your discount and rental potential criteria.
Analyzing Deals

When analyzing the rental portion of your BRRRR deal, The World’s Greatest Real Estate Deal Analysis Spreadsheet™ is an invaluable tool. This powerful spreadsheet helps you calculate crucial metrics like cash flow, return on investment, and long-term profitability.
Here’s how you can use it effectively:
- Input property details – Enter the purchase price, expected rent, and estimated expenses to get a clear picture of your potential returns.
- Analyze cash flow – The spreadsheet automatically calculates your monthly and annual cash flow, helping you determine if the property meets your investment criteria.
- Evaluate long-term performance – Explore how your investment might perform over time, factoring in appreciation and mortgage paydown.
- Compare scenarios – Use the spreadsheet to compare different financing options or rental strategies to optimize your investment.
Remember, while this tool is excellent for analyzing the rental aspect, you’ll need to separately assess the rehabilitation costs and potential after-repair value for a complete BRRRR analysis.
Ready to dive in? Download your free copy of The World’s Greatest Real Estate Deal Analysis Spreadsheet™ at:
https://RealEstateFinancialPlanner.com/spreadsheet
Use it to analyze your BRRRR properties or any other rental properties you have.
Market Conditions
Some real estate markets are better for BRRRR than others.
Ideal
Here are the key characteristics of an ideal market:
- Discounted Properties – Seek markets where you can snag properties that need work at below-market prices. This gives you the opportunity to add value and boost your equity.
- Strong Cash Flow Potential – Look for areas where rental income comfortably covers your expenses. This ensures your investment generates positive cash flow from the start.
- Appreciation Potential – Target markets with a history of property value increases and promising future growth. This helps build your long-term wealth through appreciation.
If you’re considering BRRRR for short-term rentals, don’t forget to evaluate the short-term rental viability as well.
Challenging
What are challenging market conditions for BRRRR?
- Negative Cash Flow Markets – In some areas, even with a reasonable down payment, you might find yourself losing money each month.
- Stagnant or Declining Markets – Areas with no appreciation or, worse, negative appreciation can significantly impact your BRRRR strategy.
Accessibility/Availability
Finding the perfect BRRRR property is like searching for a needle in a haystack. These deals are often elusive in the real estate market. Why? You’re not just after any fixer-upper—you need a property that’s ripe for renovation and has the potential to be a cash-flow powerhouse as a rental.
Let’s break down BRRRR property availability:
- Market-dependent availability – Some real estate markets are treasure troves for BRRRR opportunities, while others might leave you high and dry.
- Dual criteria challenge – You’re hunting for a property that ticks two crucial boxes: it needs work (to snag it at a discount) and must have strong rental potential. This combo significantly narrows your options.
- Expand your horizons – Don’t just stick to your backyard. Consider venturing into remote markets where BRRRR gems might be more abundant. This approach can unlock a whole new realm of possibilities.
The beauty of BRRRR lies in its versatility. You can apply this strategy to a wide range of property types, from single-family homes to small multifamily properties like duplexes and fourplexes, and even commercial or industrial real estate. Plus, you have the flexibility to focus on traditional long-term rentals or pivot to short-term rentals for potentially higher returns.
Using Retirement Account
Self-directed retirement accounts can be utilized for BRRRR investing, offering a unique way to grow your retirement funds through real estate. However, this approach comes with important considerations:
- Financing changes – When using retirement funds, you’ll likely need to use non-recourse loans. These often require larger down payments and may have less favorable terms than traditional financing.
- Work restrictions – IRS regulations prohibit self-dealing. This means you cannot personally perform work on properties owned by your retirement account. All renovations must be carried out by third-party contractors.
- Lower refinance LTV – Lenders may offer lower loan-to-value (LTV) ratios for properties held in retirement accounts during the refinance stage. This could limit how much equity you can access, potentially affecting the core BRRRR strategy.
Using retirement accounts for BRRRR investing can be a powerful strategy, but it requires careful planning and understanding of the limitations.
Conclusion
In conclusion, the BRRRR strategy offers an exciting path to building a robust real estate portfolio. While it requires significant effort, market knowledge, and careful planning, the potential rewards are substantial. By strategically buying, rehabbing, renting, refinancing, and repeating, you can leverage your initial investment to acquire multiple properties over time.
Remember, success with BRRRR comes from diligent deal analysis, effective rehab management, and a solid understanding of your local real estate market. It’s a strategy that can accelerate your journey towards financial freedom through real estate, allowing you to build equity and generate cash flow simultaneously.
As with any investment strategy, BRRRR comes with its own set of challenges and risks. However, armed with the right knowledge, skills, and a willingness to adapt, you can navigate these obstacles and turn them into opportunities. Whether you’re a seasoned investor or just starting out, the BRRRR strategy offers a powerful tool to grow your real estate empire and achieve your long-term financial goals.
So, roll up your sleeves, do your due diligence, and get ready to BRRRR your way to real estate success.