Is BRRRR Dead for Everyone Else?

When I first got into real estate investing, the BRRRR strategy was my bread and butter.

I’d buy older, often heavily distressed properties, gut them, renovate, rent them out, and then refinance to pull my cash back out. It worked great for a long time, I could recycle the same capital over and over again and keep scaling.

Over time, I found ways to pivot a little. I started using commercial loans that offered higher leverage, which meant I could often get into deals with little or no money down. BRRRR wasn't always necessary anymore, but I could still do it when it made sense.

Fast forward to now, and my business has shifted more toward ground-up new construction and build-to-rent projects. BRRRRs are tougher to make pencil. If we build them right, we still capture some equity and minimize the capital we need to bring in,  but we’re definitely not in the same environment we were a few years ago.

I actually just went under contract on what would be a "classic" BRRRR again, a heavily distressed property that's already gutted (which I love, fresh slate). We negotiated a great purchase price, we know our renovation numbers inside and out, and there's solid equity on paper.

The issue? Cash flow.

Even with the equity, the holding cost at today’s rates kills the cash flow. We could flip it, but the market’s slower right now, and I always like to have the option to hold.

At this point, if I’m going to have trapped equity and tight cash flow, I almost prefer just building new, at least I get low maintenance costs and better rent growth potential for the next few years.

So I’m curious, is anyone else seeing the same thing?

Are you still doing BRRRRs successfully right now, or has this higher-rate environment basically killed the model unless you’re finding absolute home-run deals?

Would love to hear what’s working (or not) for others in today’s market.