Did low rates ruin BRRRR expectations?

Question

Feels like a lot of BRRRR deals worked a few years ago simply because money was cheap.

Investors could overpay a bit, miss rehab numbers, refinance easily, and still come out okay. Now it feels like every mistake gets exposed fast.

I’m noticing the investors still buying are just way stricter on their numbers now. Tighter entry prices, more conservative rehab budgets, and less dependence on appreciation saving the deal.

Do you think BRRRR actually got harder… or are we just seeing the market correct years of aggressive underwriting?

Mohammed Rahman · Answer

I don’t think BRRRR itself changed as much as the environment around it did.

A few years ago, cheap debt and fast appreciation could cover a lot of mistakes. If you went a little high on the purchase price or the rehab ran over budget, the refinance and rising values often helped clean things up on the back end.

Today it feels completely different. There is no easy exit built in. You have to be right on the purchase, the rehab scope, the rent projections, and the timeline. If even one of those pieces is off, the entire deal feels it.

So to me, it is not that BRRRR suddenly became a bad strategy. It just feels like the training wheels came off. The strategy still works, but it only works when you execute with more precision and build in real margin from the start.

What I find interesting is that the investors who are still active right now are usually the ones who were conservative even during the easy money years. Their approach did not change. The market simply stopped bailing people out.

Caleb Brown · Answer

I think COVID was the unicorn years and we are back to reality. Anybody was able to BRRR back then due to rising prices and cheap money, not the same this year or recently

Caleb Brown · Answer

Right, it was a once in a lifetime occurance

Frank Ransom · Answer

I've been telling my investors the same. The majority view it as a painful time to be an investor, but the reality is that we are just moving from a dream back to regulation. That's an EXPERIENCED catch.