The BRRRR method explained

BRRRR stands for Buy, Rehab, Rent, Refinance, Repeat. The idea: force a property's value up with a renovation, refinance to pull most of your cash back out, and roll it into the next deal — so the same capital buys multiple rentals over time.

The five steps

1. Buy a property below market value — usually one that needs work, often with short-term or cash financing.
2. Rehab it to raise both the rent it commands and its appraised value (the after-repair value, or ARV).
3. Rent it to a tenant so it produces income and an appraiser sees it as a performing rental.
4. Refinance into a long-term mortgage based on the new, higher ARV — pulling out much of your original cash.
5. Repeat with the cash you recovered.

The number that makes it work: the 70% rule

If a renovated comparable sells for $200,000 (ARV) and the rehab is $30,000, a common BRRRR target is to be all-in at no more than 200,000 × 0.70 − 30,000 = $110,000. Buy and rehab for around that, refinance at ~75% of the $200k ARV ($150k), and you can recover most — sometimes all — of your invested cash while keeping a cash-flowing rental.

How to tell if a BRRRR deal pencils out

After the refinance, two things matter: how much cash you leave in the deal (ideally little) and whether it still cash-flows at the new mortgage payment. A deal that returns all your cash but barely breaks even on rent isn't a win; one that leaves a little cash in but cash-flows strongly often is.