Landlording & Rental Properties

The Investor’s Guide to the BRRRR Method: Buy, Rehab, Rent, Refinance, and Repeat

Expertise: Flipping Houses, Landlording & Rental Properties, Personal Development, Real Estate Investing Basics
43 Articles Written
aerial view of houses and culdesacs and tree-lined streets

As you pursue your real estate investing education, you've no doubt encountered the acronym "BRRRR." Whether you're listening to Brandon and me on the podcast, perusing the forums, or reading the blog posts, someone always mentions BRRRR.

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No, they’re not chilly: BRRRR stands for buy, rehab, rent, refinance, repeat. In other words, the smart investor’s investment cycle.

Ready to start investing? Check out BiggerPocket’s BRRRR calculator.

The 5 Essential Elements of BRRRR

When you buy a property, fix it up, improve its value, and then refinance, you’re borrowing against the value of the property at its highest. Done correctly, this allows you to recover more of—or sometimes all of—the money you invested in the property.

Here’s what you need to know.

B — Buy

They say you make your money when you buy, and that’s definitely true. But to paraphrase Tolstoy’s opening line to Anna Karenina, all good deals involve a good purchase, but each bad deal is bad in its own way.

Most lenders will finance 75 percent of a property’s value, so holders should aim for 75 percent all-in. And we generally do because we have some money we can leave in the deals and are prioritizing volume. If that doesn’t describe you, I would argue you should stick with the 70 percent guideline for two reasons:

  1. Refinancing costs money. Most banks charge a point and there will be an appraisal, title work, and loan processing fees that eat away at your margin.
  2. Aiming for 75 percent offers no contingency. People go over budget more often than under budget so building in a bit more of a margin is a better idea unless you are going for volume.

A number of options can help you purchase your BRRRR property, such as cash, a hard money loan, seller financing, or a private loan. Deciding which upfront financing to use is outside this article’s scope, but what’s important to note here is that different upfront financing options will result in different acquisition and holding costs. You need to account for those when analyzing a deal in order to hit your 70 or 75 percent goal.

So what’s the key to BRRRR success? Buying properties under market value and never investing more than 75 percent of the property’s after repair value (ARV). This ensures you never run out of capital and can continue buying forever.

Start with your ARV. I recommend having a trusted source like an experienced agent, lender, or other investor give you a conservative number they believe the house will appraise for once it's been repaired the way you intend. Take that number and multiply it by .75. This is your "target." Your goal is to get the rehab and the purchase price to add up to this target goal.

If you pay too much for a property, there is very little you can do to recover from surprises and problems.

R — Rehab

There are two key questions to keep in mind when rehabbing a rental:

  1. What do I need to do to make this house livable and functional?
  2. Which rehab decisions can I make that will add more value than their cost?

If you rehab correctly and make sure you add value when you do, you are pretty much guaranteed to recover your money—and then some. However, unless you buy and hold luxury rentals, generally speaking, these things aren't necessary:

  • Granite countertops
  • Brazilian hardwood floors
  • High-end stainless steel appliances
  • Bay windows
  • Skylights
  • Hot tubs
  • Chandeliers

It’s also rarely worth finishing a basement or a garage for a rental. Instead, consider changes like two-tone paint, refinished hardwoods, and new tile.

And, of course, the house needs to be in good shape. Everything needs to be functional. Being a slumlord will hurt you in the long run—and our industry’s reputation. But it won’t be in good shape when you purchase it. That’s the point. I intentionally look for properties that need massive repairs because I know other investors will ignore them, and the sellers will be more motivated to drop their prices.

Some of the best problems to look for are:

  • Roofs: If you add a new roof, appraisers tend to give you back the money you spent in property value.
  • Unfinished kitchen: An outdated kitchen is ugly but still usable. A partially demoed kitchen makes a house ineligible for financing and therefore much easier to buy with cash.
  • Drywall damage: Drywall damage makes a property ineligible for financing while also scaring away the majority of home buyers. The good news? Drywall isn’t super expensive to repair.
  • Horrific landscaping: Overgrown vegetation frightens the competition but costs very little to repair. You don’t need a skilled landscaper to hack down overgrown landscaping, so a few hundred dollars will take you further than you think.
  • Outdated bathrooms: I routinely completely remodel bathrooms for $3,000 to $5,000. Most bathrooms aren’t very big, so the material and labor costs come in low. This allows your house to compare to much nicer homes in the neighborhood with higher ARVs.
  • Too few bedrooms: Homes with more than 1,200 square feet but less than three bedrooms offer easy ways to add value. Adding a third or fourth bedroom helps it compare to much more expensive properties, increasing your ARV.

By targeting properties like these and making repairs at below market value, you can add big equity to your deals.

Related: 7 Ways to Create Bedrooms and Baths and Add Amenities for Your Rental

R — Rent

Banks rarely want to refinance a property that isn’t occupied, so renting comes first. It’s critical to screen diligently so you get tenants that will pay each month. But it’s also important on the financing side. While appraisers shouldn’t take too much into account about how clean and pleasant the tenant is, everyone is human. First impressions make a difference.

Related: How to Run a Tenant Background Check

You need to notify the tenant before an appraisal. I always recommend you request interior appraisals versus drive-bys: Appraisers are more cautious and may downgrade your property unfairly with drive-bys. Send out or post a note on your tenant’s door about the date and time and give a reminder call the day before, unless your local laws require something else. Tenants don’t need to be present, but you should ask them to clean up and kennel any pets if they won’t be home.

One thing to keep in mind with the BRRRR strategy: Your mortgage will typically be slightly higher than with the traditional method because you are borrowing more money against the house. This is well worth it: Capital in the bank can be used to grow wealth, while equity in a property can't be used for much. The flip side of this argument is that your cash flow will be slightly lower with the higher mortgage payment.

This just means you have to be that much more careful when it comes to running rental comps and knowing what you can expect for rent once you purchase your property.

Related: How Much to Charge for Rent in 2020: A Landlord’s Guide

R — Refinance

Not too long ago, it was extremely hard to find a bank that was willing to refinance single-family rental properties. Now it is much easier. Still, when looking for such banks, there are a few things that you will need to ask:

  1. Do they offer cash out or will they only pay off debt? If they won’t offer cash out, move on.
  2. What seasoning period do they require? A “seasoning period” is how long you have to own a property before the bank will lend on the appraised value instead of how much you’ve invested. For the BRRRR strategy to work, you must borrow on the appraised value. These days, some banks are willing to lend on the appraised value as soon as a property has been rehabbed and rented. These are the best banks to find.

To find great BRRRR banks, ask around. Ask investors you know, or query our BiggerPockets forum users. A bank already lending to another investor will likely lend to you, too.

Here’s another unique way to find such banks. Go to a website such as ListSource or CoreLogic and search for every loan made in your city and price range in the last year to non-owner occupants. This search will probably cost a couple hundred dollars.

Right off the bat, you know these banks lend to investors at the price point you require. They’ve done it before, so there is a good chance they will do it again.

Provide the lender with thorough, clear information. This impresses them—remember, these are human beings, not computers—and helps them decide quickly.

The trick to being successful here is getting as high of an appraised value as you possibly can. A big part of success in this area is a combination of how well you rehabbed your property and how strong your initial comps were.

Sinking a lot of capital into a deal and then failing to pull it out is a big problem. I recommend getting pre-approved for a loan before buying.

R — Repeat

The “repeat” part of the BRRRR cycle is the most fun. Take everything you learned, gained, and improved upon and put it back into action.

Work on building systems, too. Systems help you accomplish your objectives by repeating the same process, over and over. Systems cut down on mistakes and stress. The more documented your systems are, the less you'll worry about something being missed, overseen, or forgotten about.

Related: How I Bought, Rehabbed, Rented, and Refinanced 14 Properties at Once

Buying Rental Properties the Traditional Way

The traditional method of buying rental property involves buying a property with financing, such as a mortgage, then rehabbing, renting, and eventually repeating the process later. You might call this BFRRR: buy, finance, rehab, rent, repeat. (But nobody calls it that. BFRRR is a ridiculous acronym—and because so many people purchase property this way, there is no need for a special name.)

The traditional method of buying properties is popular because it’s the most convenient. Here, you purchase properties with a loan, usually from a bank. You’ll need a 20-25% down payment. Through financing, the investor doesn’t have to work as hard to save up the full purchase price or find a hard or private money lender. The ease of this method can be seductive! However, like most things in life, easiest is not often best.

The traditional investor then spends as little money as possible prep the property (the “rehab” portion). Huge mistake: Rather than adding value (and increasing equity) through rehab, the investor aims to save money—which costs a lot of money in the end.

How the Traditional Method Eats Up Capital

In short, BRRRR works better because you can recover the capital you left behind in the traditional method.

The traditional method involves putting a percentage of the home’s value down up front, when the home’s value is lowest. Think about it: Investors are always looking for deals. If an investor does their job well, they pay less for a property than it is worth. Banks base the amount of money they will let you borrow off of the purchase price of a property. If you pay $70,000 for a $100,000 property, the bank lets you borrow a percentage of that $70,000.

The loan to value (LTV) ratio determines that percentage. If a bank allows an 80 percent LTV, that means the borrower needs 20 percent for a down payment. Higher allowed LTVs equal less money down for the investor.

When you use the traditional method, this down payment gets left in the deal. That means if you pay $70,000 for that $100,000 home and put 25 percent down, you drop $17,500 for the down payment. You’ll still need money for the rehab.

Every deal is different, but the rehab budget for most houses purchased the traditional way equals 20 percent of the home’s ARV (after repair value). In this example, that would be $20,000. Negotiating that cost down half leaves you with a $10,000 rehab budget. When all is said and done, you will have spent $80,000 ($70,000 purchase price plus $10,000 rehab) for an investment property worth $100,000. The good news? You’ve gained $20,000 in equity. The bad news? You dropped $27,500 of your hard earned money to do so.

Leaving your down payment in the property as equity hurts your ability to buy more properties. Leaving your rehab budget in the property hurts your ability to buy more properties—and discourages you from spending more money to create more equity.

How the Traditional Method Hurts Your Deal Flow

Maintaining investment capital is crucial to finding better deals and growing your investments. Investment masters are active in the game. Using the traditional method, you simply run out of money too fast.

If you want to make hot deals, you must be ready, willing, and able to close. If you’re not in a position to move, someone else will swoop in and buy it before you can.

Traditional method loans slow you down. Lenders require appraisals, and they also require livable properties. Many of the best properties aren't in great shape—that's why they're priced so low! If

The traditional method causes investors to run out of capital quickly, miss out on truly distressed properties, and close slowly. These factors hurt your odds of landing the contract first.

How the Traditional Method Hurts Your Wealth Growth

Buying properties under market value is the best way to grow your wealth. In the earlier example, we spent $80,000 on a property worth $100,000. This added $20,000 to our net worth, before appreciation, loan pay down, and cash flow.

With every house we buy traditionally, we add another $20,000 to our net worth. Doing this every two months adds $120,000 to our net worth. In a little over four years, we would have accumulated a net worth of a million dollars. Not too shabby—right?

Except we needed $27,500 of cash to add $20,000 to our net worth. This prevents us from buying more, slows our growth, and puts a limit on other aspects of investing like getting the best deals first.

If you want to grow your wealth quickly, efficiently, and safely, you need to acquire cash flowing rentals—quickly. Think of buying rentals like planting trees. Every year that tree grows, puts off more fruit, and increases in value… most of the time. The wealthiest own orchards, not small gardens.

Can you grow an orchard using the traditional method? Maybe if you have a ton of cash laying around. Even then, it would still be slower than if you used BRRRR.

How the BRRRR Method Helps You Recover More Capital

With the BRRRR method, in all likelihood, we will pay less for properties. Why?

  1. Pay with cash—or at the very least, without a financing contingency
  2. Buy properties that don’t qualify for traditional financing
  3. Close more quickly and with fewer contingencies
  4. Improve the properties value more through rehab, so we can buy odd homes for less.

Let’s imagine we pay $70,000 cash for that $100,000 property, then put $10,000 in for repairs. This leaves us all-in for $80,000 on a property worth $100,000. With the BRRRR method, the refinance portion comes after rehab. The bank bases the property’s value on its $100,000 worth, not the $70,000 we paid. At the same 75 percent LTV, we could refinance and recover $75,000. Considering we only spent a total of $80,000 to buy and fix up the house, this means we only left $5,000 in the deal.

Compare that to the traditional method, which left $27,5000 in the deal. The BRRRR method returns us $22,5000 that would have been held up in the property had we bought it the traditional way. That’s a big difference!

Becoming a Black Belt Investor

The good news for you is that by following the principles that lead to a good BRRRR deal, you will inevitably also follow the same principles that lead to good real estate investing. By mastering the five elements of BRRRR, you will also master wealth-building through real estate.

A black belt martial artist practices specific movements, maneuvers, and techniques until they can perform them with perfection.

When investors do the same thing over and over, we, too, can reach a point where we can perform that action at a very high level. Through BRRRR, you recover a higher portion of your capital, which allows you to buy more deals and grow your net worth faster

Become a black belt investor by doing more deals, which:

  • Creates a reputation within the community of someone who can close. This means more deals will come your way.
  • Builds your own experience, making you smarter, faster, and better.
  • Gets you better rates on your rehab projects from your contractors, because you make them more money.
  • Gives you a bigger portfolio, allowing you to pay less for property management fees.
  • Provides the flexibility to earn more money by wholesaling, flipping, or selling your properties to other investors, turnkey style.
  • Opens more leverage with local banks to get better financing terms.

There is value in volume. If you want to become a black belt investor, you need more repetitions and more practice. This is much easier when you take advantage of the BRRRR method and your ability to create wealth by recovering more capital and buying more real estate.

BRRRR investing is the most efficient way to invest in real estate. It’s so powerful that I often tell investors not to buy anything until they are able to BRRRR—it will change your investing life and have a huge impact on your wealth.

Do you use the BRRRR strategy to build your portfolio quickly? Have any questions about the steps in the BRRRR process?

Comment below—and let’s chat BRRRR!

David Greene is a former police officer with over nine years of experience investing in real estate that includes single family, multifamily, and house flipping. David has bought, rehabbed, and man...
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    Jacob Stoecker from Minneapolis, Minnesota
    Replied over 1 year ago
    To those employing this strategy do you own these properties in an entity right away , move them after the refinancing takes place, or do something different? Thanks David and all.
    Jon Thomson
    Replied over 1 year ago
    Thank you for the great article. When refinancing, are these conforming loans via Fannie/Freddie or portfolio loans? My current lender will not refinance. If these are conforming Fannie/Freddie loans, what are the rules that govern refinancing these types of projects?
    A Schwartz
    Replied 8 days ago
    Look for a "portfolio lender" in your state. They will handle the non conforming loans
    Mary D. Rental Property Investor from Salem, NH
    Replied over 1 year ago
    Thanks for this article! Appreciate all you do! I love the BRRRR strategy and think its the best way to accumulate wealth. But your numbers don’t add up… If your purchasing a property worth a $100K and paying $70K. WHICH IS KEY. Private money lender or a portfolio bank would lend 70%-80%. Which would be a $70K-$80K loan. They do want you to put some skin in the game, (as they call it) which maybe all or some of the closing and rehab costs. You would already have 20% equity right off the bat and you would most likely be putting in closing costs and/or points and rehab costs. The goal is, if at all possible, to get the property at 70% or less of what it is worth. Which in your example would be purchasing this property for $70K and it is worth $100K. As a rule I shoot for an extra $10K or a percentage for rehab overages depending on how much Im purchasing the property for. Again thanks for all you do, I love BRRRR and it was a great article!
    Mitchell Morwood Rental Property Investor from Janesville, WI
    Replied over 1 year ago
    Awesome article. So if you buy a $100,000 house and rehab and rent for $1400 ( on the high side). Pull 200,000 out in the refi. Now your mortgage payment is about $1300. That’s only $100 for cashflow. So my main question is: Do you have to or should you follow the 2% rule when it come to renting it out? Also the 50% rule? Thanks!
    Angela Zheng
    Replied about 1 year ago
    Great article! Wondering how can a long distance investor like myself could get started on BRRR?It seems you do need local expertise and a local system in place to execute everything
    A Schwartz
    Replied 8 days ago
    My suggestion. Have an itemized list of things to do with the contractor; and each item has a due date and dollar amount. The agreement with the contractor should specify that a home inspector will come through once a week, check off what was or was not done; and take photos which will be sent to you. So the contractor is held responsible and you get a weekly progress report. No payment to contractor until the work is completed. The home inspector is your "boots on the ground" and you will have to pay extra for their weekly visits
    Ivan Lopez
    Replied over 1 year ago
    This is a great article David, thanks for sharing!
    David Greene Real Estate Agent from Discovery Bay, CA
    Replied about 1 year ago
    Ken B. from yucca valley, ca
    Replied about 1 year ago
    Thanks David, Have watched your webinar at least 5 times and this article is great. Absolutely no comparison between traditional method and BRRRR. Reading your new BRRRR book for the second time. This is the only way to go for me. Thank You David, this is life changing.
    Peter Hendler from Oakland, CA
    Replied 11 months ago
    I really appreciate this article David! The best part is not the information provided, but the questions that it creates... I can't wait to learn even more. I live in your neck of the woods and would be really excited to attend some of the events you present on this subject, and others Im sure. Thanks David!
    Yosef Katz New to Real Estate from Brooklyn NY
    Replied 11 months ago
    how can you work this from long distance?
    Eric Ramsay Real Estate Agent from Aberdeen, MD (21001)
    Replied 11 months ago
    One of the most insightful articles I've read on BP, thanks David! Quick question, do you know if traditional mortgage lenders underwrite the refi's the same way they would a convention mortgage? I'm a newly license agent in MD without a sales history to lean on and am wondering if refi's tend to be viewed differently. I have cash reserves to start putting this approach into action, but predictable income is a concern and given how crucial the refi component is to this strategy I'm wondering if you have any insights to share here. Thanks! Eric
    Jackie Hung
    Replied 8 months ago
    Very informative article. It is important to get accurate rehab budget IMO and the timing is key too. How many contractors do you work with and how many do you consult to determine the rehab cost before putting in an offer? or do you have your own GC on payroll? Do you use the same "rehab template" for materials and colors and rule of thumb what you will replace? How often are you on budget and on time for the rehab?
    Matt Shuler
    Replied 6 months ago
    Too bad you make the picture much rosier than the real truth! Banks require 1 year of seasoning which is 1 year after purchase and the new value based on the new appraisal is used. Second you leave out Two huge cost which are the closing cost which for each transaction will cost you 3+ % depending on loan amount! So now your ROI and new equity after refinancing has dropped significantly. Next your scenario only looks at the market always going up! Which we all know it doesn’t! In addition your cash on hand is increased with each purchase to qualify. Also banks require looking at the schedules on tax returns to figure your real cost and will disco the rent by 25% to take into consideration potential non Rented times! Lastly you fail to mention that rental properties property taxes are 3 times higher than primary home . These are all important parts of the puzzle! With that said I am a proponent of owning rental property and structuring it to obtain the max cash flow possible!
    A Schwartz
    Replied 8 days ago
    Matt: most lenders require 6 months rather than one year of seasoning. Also property taxes are the same on rentals or primary homes.
    Amy C. from Philadelphia, PA
    Replied 7 days ago
    That is a vast generalization re: property taxes...please compare Philly multi-units to New Jersey SFH.
    Jeanne Justice
    Replied 8 days ago
    Florida property taxes can be significantly different for investment properties versus primary "homestead" properties, as primary home increases have capped annual increases and investment properties do not.
    Benjamin Larouche New to Real Estate from Montreal
    Replied 12 days ago
    Hi Matt, not all banks require what you're referring to above or not at the same level (example: 25% vacancy rate). Your local banking regulations is different than other states / countries. Those considerations are important for your market. It be better for you to offload the property in the short-term or to look at seller financing options to reduce your interest rate. Good luck!
    Account Closed
    Replied 5 months ago
    Hey David. Thank you for taking the time to write this article. I am a new investor in Toronto Ontario Canada. Are there any special considerations that Canadians should be aware of when using the BRRRR strategy? Respectfully, Robert Hegy
    Philip Kuhl
    Replied 2 months ago
    David, in your BRRR examples, are you purchasing the properties for cash as you mentioned lenders don't want to lend on ugly properties?
    Addie Miles
    Replied about 2 months ago
    David, paid 70,000. cash for a single family bungalow which should have cost me 50-55,000(inept realtor) I have spent 18,000 in rehab. Can I refi the house for 70,000 or appraised value now. It will be rented in June for 800-850/mo.
    Chase Lee
    Replied 13 days ago
    Great primer on BRRRR! Just a minor quible... it's Anna Karenina, not Karina :-)
    Greg Albert Accountant from Albany, NY
    Replied 9 days ago
    I completed my first house hack last year in Albany, NY and I have officially caught the real estate bug. Now I want to complete my first BRRRR deal with a hard money lender but have reservations about hard money. Is there a process you would recommend for vetting these lenders to make sure I am not signing my life away when I do a deal? The notion of someone willing to give me this type of money over the phone seems too good to be true. Thank you for the advice and insight!
    Deeandrea Burgos from Baltimore, MD
    Replied 9 days ago
    I’m sure others can add to this but typically getting a hard money loan should not be difficult as long as you meet all of their requirements. Their job is get you the money but ensure that they check the deal As part of their requirements. Also local meetups have hard money lenders do talks. I just found a local hard money lender that has been doing meetups and now virtually from
    Michael Wolffs from New York City, New York
    Replied 9 days ago
    A larger problem with this methodology, which I've been trying to use, is appraisals. I've had a couple of properties where I've bought and rehabbed for cash or non-mortgage debt, and then tried to mortgage out. On both of these, the appraisals came out ridiculously low. I was in situation where I could supply solid comps justifying the valuation I wanted and the appraisals (I had two done) came in 25% low. In another one, there were really not great comps, but cash flow valuation justified what I was looking for, and again the appraisal came in 25% below what I wanted. So be careful with BRRRR, you can get caught just as you think you're getting out.
    Amy C. from Philadelphia, PA
    Replied 7 days ago
    Michael Wolffs, that is sooooo true! We have been burned by low appraisals also, even with comps in hand. I just don't get the seemingly, completely subjective nature of that business and how to mitigate the problems they can cause.
    Scott Krause Rental Property Investor from Bushwick, Brooklyn
    Replied 9 days ago
    I'm new to real estate and I don't quite understand these statements: "Holders should aim for 75% all in." Does this mean that we should aim to finance 75% of all upfront costs (down payment, closing, rehab)? "We generally do so because we have some money we can leave in the deals and are prioritizing volume." I don't follow how this helps to prioritize volume. I am inferring that "volume" means that we want to repeat the cycle rapidly to build wealth quickly, but I don't understand how to optimize for volume aside from avoiding bad deals, getting the math right, and avoiding ballooning rehab costs.
    Aaron Smith from Deer Park, WA
    Replied 8 days ago
    My understanding is that 75% all-in means he will be taking out a loan for 75% of the ARV. He points this out because BP advocates that flips and BRRRR should aim to spend no more than 70% of ARV, all expenses considered (the "70% rule"). The author here is willing to pull out more cash in the refi step in order to have additional capital for investing in more properties, even though this hurts cash flow a little. This optimizes volume.
    Deeandrea Burgos from Baltimore, MD
    Replied 9 days ago
    Hi Scott. Just wanted to follow up on this great question! If you are using 75% as your “max” then that means 75% includes all your costs. Example: if the property once fixed up will appraise For $100,000 then you don’t want to spend more than $75,000. This include rehab (assume $10,000), closing costs+holding fees (assume $5,000). And sure there can be other fees but using this example this means you should only by the property for max $60,000. When you refinance, albeit there are caveats and local bank rules, you will refinance at $100,000. That extra $25,000 you get (after paying off the $75,000 invested (either through a private lender, your own money or a hard money lender) can be use to find your next deal. Using these numbers you were able to “not leave money in deal”. I think he is mentioning increase volume with respect to the tradition financing method where you will have to spend time re-accumulating a down payment for your next deal. Hope that makes a little better sense.
    Kataka Page from Chicago, Illinois
    Replied 9 days ago
    Where do you get the money to buy in cash?
    Deeandrea Burgos from Baltimore, MD
    Replied 9 days ago
    If you have a 1. private money lender that’s one option (not all of us have private money lenders, myself included). 2. Typically a hard money lender is what newer investors may use (I’ve use a hard money lender) they also help evaluate the deal to make sure it’s a good deal 3. If you own a home and there’s equity then pulling the equity 4. Nothing wrong with reducing your expenses if possible and save for a year or whatever is viable. 5. I’m sure there are other creative ways Hope this helps
    Ricardo A Perez
    Replied 9 days ago
    Thanks for the great article @David Greene it add confidence in the strategy of the BRRRR as a new investor I so glad for bigger pockets I feel like I been set up to win !
    Todd Hoffman
    Replied 9 days ago
    David, Thanks for this explanation of the BRRRR method. I am wondering if there is a way to take the traditional method that you explained (purchasing with financing and then doing repairs as you go) and switching that around so you can BRRRR the next one? Is the only way out to sell or can you do repairs and then refinance to recoup money for your next deal? I appreciate any insight you or anyone else may have on this. Thanks again and keep up the good work.
    Loren Clive Residential Real Estate Broker from Haiku, HI
    Replied 9 days ago
    you can do this with a total refi or home equity line of credit on the improved property, assuming you have appreciation.
    Steve Vaughan Rental Property Investor from East Wenatchee, WA
    Replied 8 days ago
    Thank you for mentioning seasoning requirements. I have seen a lot of surprised people on the forums that thought you could just refi at appraised value as soon as the place is rehabbed and rented. My direct lender says 6 month seasoning for a rate/term refi, 12 months for cash out. Fine for me but nobody likes surprises.
    Boris Palanker
    Replied 8 days ago
    I am new to real estate but just to understand, in the example used where you purchase a property thats worth $100k ARV for $70k and then invest an additional $10k for rehab bringing your total investment to $80k with $20k in equity why can’t you use financing as oppose to an all cash purchase to accomplish the same result? If you put down 25% on a $70k loan, this means you would put down $17,500 and finance the remaining $52,500. Then you add to that an additional $10k for rehab and your all in cost is the same $80k with a property that is now worth $100k. At which point the bank will now appraise your property at $100k and give you a loan for 75% LTV giving you back $75k of the $80k you invested. (This does not include holding costs, agent fees, etc. I’m just referencing the example above). If you buy the property all cash for $70k and invest an additional $10k for rehab, you’re all in for $80k with 20k in equity. The bank will then let you refinance at 75% LTV giving you back $75k of the 80k you invested. Isn’t this the same thing?
    Enrico Saladino
    Replied 3 days ago
    Bump. I too would like to know the pros/cons of working it this way through a traditional method and then refi-ing.
    Maurice Moody Rental Property Investor from New Haven, CT
    Replied 8 days ago
    Hello, I’m new to the BP group and I had a question on the BRRRR method. After reading this, my question is for my first rental property deal should I try to pay cash vs traditional financing to execute the BRRRR method the best?
    Jess Holwick
    Replied 4 days ago
    our DTI is high so I am assuming it is best to refi into commercial loan?