The BRRRR Strategy: Buy, Rehab, Rent, Refinance, Repeat

BRRRR is a way to recycle the same capital into multiple rentals. You buy a property below its potential value, renovate it, rent it, then refinance based on the new value to pull out some or all of your cash. If it works, you repeat. If any step misses, your money can stay stuck in the property.

The five steps

1. Buy a property that needs work at a price that leaves room for renovation and profit.
2. Rehab it to rental-ready condition, focusing on improvements that increase value and rent.
3. Rent it to a qualified resident at market rent.
4. Refinance with a long-term loan based on the new appraised value.
5. Repeat with the cash you recovered.

A sample deal

• Purchase: $70,000
• Rehab: $35,000
• Closing and holding costs: $8,000
• Total invested: $113,000

After renovation, the home appraises at $150,000. A lender offers 75 percent of value: $112,500. Most of the investment comes back out, minus refinance costs. If the appraisal comes in at $130,000 instead, the loan is $97,500, and roughly $15,000 or more remains in the deal. These numbers are illustrative.

Why it is harder now

Higher interest rates mean larger loan payments, so many properties no longer cover their debt after a cash-out refinance. Rehab costs have also climbed, and lenders often require a waiting period after purchase before using the new value. BRRRR can still work, but margins are thinner.

Two inputs carry the whole plan

• After-repair value: how much the refinance lender will appraise it for.
• Rent: how much income supports the new loan payment, often measured with a debt service coverage ratio.

If either disappoints, the strategy stalls.

Financing the buy and rehab

Options include cash, hard money, private lenders, home equity lines, and renovation loans. Short-term loans are expensive, so delays cost money every month. Confirm the refinance lender's requirements, including seasoning periods and maximum loan-to-value, before you buy.

The 70 percent guideline

Many rehab investors aim to pay no more than about 70 percent of ARV minus repairs. It is a rough starting point, not a rule; adjust it for your market and financing.

Section 8 and BRRRR

Renovated homes in many Michigan and Ohio neighborhoods can rent to voucher holders if they pass inspection and the rent is reasonable. Housing authority payment standards can help support the rent assumption, but confirm them for your area.

Using S8 Atlas

The S8 Atlas Deal Finder shows distressed and value-add listings with Deal Analysis and AI Analyze tools that help you test ARV, rehab, and refinance assumptions before you commit.