How to Execute the BRRRR Method

Introduction: What Is the BRRRR Method?

BRRRR stands for Buy, Renovate, Rent, Refinance, Repeat. It is a value-add real estate investing strategy designed to recycle capital, accelerate portfolio growth, and (when executed well) create properties with little to no capital left invested.

In markets where prices are high and cash flow margins can be tight, BRRRR is one of the few strategies that allows investors to scale meaningfully without constantly injecting new capital. However, it is also one of the most misunderstood and poorly executed strategies.

This guide walks through how BRRRR actually works, the financing structures that make it possible, renovation and refinance considerations, and a realistic example based on current market norms.

Step 1: Buy – Acquiring the Right Property

The success of BRRRR is determined at purchase. Not every property is a BRRRR, even if it needs renovations.

What Makes a Good BRRRR Property?

• Below-market purchase price (distress, outdated condition, off-market, or motivated seller)

• Value-add potential (adding bedrooms, units, legal basement suite, improved rents)

• Strong refinance value after renovations

• Financing flexibility (ability to close with alternative or short-term capital)

Common BRRRR property types:

• Duplexes and triplexes with under-market rents

• Single-family homes with legal or soon-to-be-legal basement suites

• Small multi-residential (4–6 units) with operational inefficiencies

Financing the Purchase

Most BRRRR deals do not start with conventional bank financing. Instead, investors commonly use:

• Private mortgages

• Vendor Take-Backs (VTBs)

• Joint venture capital

• Home equity lines of credit (HELOCs)

• Cash or bridge loans

Why? Because traditional lenders often:

• Lend based on current condition, not future value

• Require properties to be rentable and stabilized

• Limit refinance timing

Short-term capital gives flexibility — even if the rate is higher — because the loan is temporary.

Step 2: Renovate – For Appraisal, Not Emotion

Renovations in a BRRRR are not cosmetic passion projects. They are strategic, appraisal-driven improvements.

Renovations That Typically Increase Value

• Legal basement suite conversions

• Adding bedrooms or bathrooms

• Improving unit layouts

• Fire separation and soundproofing

• Electrical, plumbing, and HVAC upgrades

• Cosmetic upgrades only where they impact rent or appraisal

Key Considerations

• Permits matter: Appraisers and lenders will discount unpermitted work

• Legal compliance: Especially for secondary suites (fire code, ceiling height, egress)

• Renovation timeline: Delays increase holding costs and can hurt refinance eligibility

A good rule of thumb: If it doesn’t increase rent or appraised value, question it.

Step 3: Rent – Stabilizing the Asset

Before refinancing, lenders want to see a stable, income-producing property.

What “Stabilized” Means

• Units are fully rented

• Market rents are achieved (or supported by comparables)

• Leases are in place (often minimum 3–6 months)

• Expenses are documented and realistic

Rent control rules make it especially important to:

• Set rents correctly from day one

• Avoid underpricing units

• Screen tenants thoroughly

Strong rent rolls directly impact refinance value.

Step 4: Refinance – The Most Important Step

The refinance is what turns a renovation project into a repeatable investment strategy.

How Refinancing Works

• Lenders refinance based on new appraised value

• Typical loan-to-value (LTV): 75–80%

• Must meet Debt Service Coverage Ratio (DSCR) requirements (often ~1.20)

Seasoning Periods

Lenders may require:

• 6–12 months ownership before refinancing

• Proof that renovations are complete

• Rental income history

Some credit unions and alternative lenders are more flexible than major banks.

Refinance Proceeds Are Tax-Free

Refinanced funds are loan proceeds, not income, making this one of the most tax-efficient ways to access capital.

Step 5: Repeat – Scaling the Portfolio

Once capital is returned (fully or partially), investors can:

• Pay off private or short-term financing

• Recycle capital into the next BRRRR

• Increase portfolio size without increasing cash invested

The most successful investors focus on:

• Consistent deal sourcing

• Reliable renovation teams

• Strong lender relationships

Real-Life BRRRR Example

Purchase Price: $650,000

Financing: Private mortgage (80% LTV) + investor capital

Renovation Budget: $100,000

Total Invested Capital: $230,000

Renovation Scope

• Legal basement suite added

• Fire separation and soundproofing

• Updated kitchens, baths, flooring

After Renovation

• Upper unit rent: $2,600/month

• Lower unit rent: $2,100/month

• Gross rent: $4,700/month

Refinance

• Appraised value: $900,000

• Refinance at 80% LTV: $720,000

Outcome

• Original mortgage + reno financing paid off

• $215,000 returned to investor

• Remaining capital in deal: ~$15,000

• Cash-flow positive property

This deal is effectively near-infinite return, with minimal capital left invested.

Key Risks and How to Mitigate Them

• Overpaying at purchase → Buy with margin

• Underestimating renovations → Add contingency

• Appraisal risk → Use conservative ARV assumptions

• Rent control mistakes → Set rents correctly

• Financing risk → Line up refinance options early

Final Remarks

The BRRRR method works exceptionally well — when executed correctly. It is not passive, it is not fast, and it is not forgiving of mistakes. But for investors willing to focus on fundamentals, BRRRR remains one of the most powerful tools to build long-term wealth.

If you control the buy price, renovate with purpose, and refinance strategically, BRRRR allows you to grow without burning capital — even in the toughest markets.