{"id":188315,"date":"2026-06-22T09:20:38","date_gmt":"2026-06-22T15:20:38","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=188315"},"modified":"2026-06-22T09:25:30","modified_gmt":"2026-06-22T15:25:30","slug":"alternative-to-the-brrrr-method","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/alternative-to-the-brrrr-method","title":{"rendered":"To Scale an Average Rental Portfolio, You\u2019ll Need $30K-$60K in Cash per Door. Here\u2019s an Alternative to the BRRRR Method That Lowers Risk and Increases Cash Flow."},"content":{"rendered":"

In the rush to acquire rental properties, many investors forget one crucial aspect of financial planning: liquidity. It\u2019s probably the single most important reason why small investors fail.<\/span><\/p>\n

I should know. I\u2019ve been there.<\/span><\/p>\n

After the 2008 crash, I lost dozens of doors. And after the COVID-19 pandemic, I was forced to give back a development to the bank when my interest rates doubled, and construction prices soared.\u00a0<\/span><\/p>\n

Yes, both were black swan events economically, but the bottom line was that I <\/span>simply<\/span> didn\u2019t have enough cash reserves to hold on to my properties.<\/span><\/p>\n

The reality of real estate investing is that it requires a lot more money than most people would have you believe. Simply checking a box that says \u201cthree months’ worth of reserves for expenses\u201d is likely to leave you woefully short of cash if you are financing a rental property.<\/span><\/p>\n

The Lost Income and Repairs Myth<\/span><\/h2>\n

A bank will demand you have six months of mortgage payments in reserve for a rental property<\/span>, but even<\/span> with a newly renovated home, many investors underestimate just how quickly tenants will beat the place up.\u00a0<\/span><\/p>\n

Clearly, much of that comes down to the type of tenants you have, but even with \u201cdecent\u201d tenants\u2014good jobs and credit scores and without a horde of wild kids\u2014damage occurs. Water heaters burst, plumbing fails, and accidents occur in the kitchen, and expecting to call a local <\/span>handyman<\/span> to fix the problem for $100 is wishful thinking.\u00a0<\/span><\/p>\n

With <\/span>short-term rentals<\/span><\/a>, expect the wear and tear and expenses to be even greater. When tenants aren\u2019t paying for utilities, they\u2019ll blast them, even when they aren\u2019t home. That not only increases your bills but also maintenance costs.<\/span><\/p>\n

In an affordability crisis, materials and gas prices have skyrocketed, and $100 won\u2019t even tempt most <\/span>handymen<\/span> to get out of bed when others are paying them $500 to patch and paint drywall. If your rental is at break-even or, at best, a few hundred dollars cash positive<\/span>,<\/span><\/strong> your financial slush fund will hemorrhage even when <\/span>you\u2019re fully rented<\/span>.<\/span><\/p>\n

How Much Do You Really Need in Reserves?<\/span><\/h2>\n

Bookkeeping and banking platform, <\/span>Baselane<\/span><\/a>, a BiggerPockets partner, suggests having reserves for:<\/span><\/p>\n