The Ultimate Guide to the BRRRR Method (2025 Edition)
The BRRRR Method (Buy, Rehab, Rent, Refinance, Repeat) is widely considered the most powerful strategy for building a real estate portfolio with limited capital. By forcing appreciation through renovations and then refinancing to pull your cash back out, you can theoretically acquire an infinite number of properties using the same initial seed money.
Table of Contents
Step 1: Buy (The Most Critical Step)
You make your money when you buy. For BRRRR to work, you cannot pay retail price. You must buy a distressed property at a significant discount.
The 70% Rule: A common guideline is to pay no more than 70% of the property's After Repair Value (ARV) minus the cost of repairs. This ensures you have enough equity to refinance later.
Step 2: Rehab (Force Appreciation)
This is where you add value. Your goal is to make the property livable and durable, maximizing the appraisal value without over-improving for the neighborhood.
Step 3: Rent (Stabilize the Asset)
Before a bank will refinance the property, it usually needs to be "stabilized," meaning it has a paying tenant in place. Screen tenants rigorously to ensure consistent cash flow.
Step 4: Refinance (The Payday)
This is the magic step. Once the property is renovated and rented, you go to a bank to get a new long-term mortgage based on the new, higher value of the property.
If you bought right, the new loan amount (typically 75% of the appraised value) should be enough to pay off your original purchase loan and your renovation costs, leaving you with little to no money left in the deal.
Step 5: Repeat (Scale Your Portfolio)
If you executed the first four steps correctly, you now have your initial capital back in your pocket. You take that same money and go buy your next deal. This is how investors scale from 1 to 100 units.
A Real-World BRRRR Example
| Purchase Price | $100,000 |
| Renovation Costs | $40,000 |
| Total Investment | $140,000 |
| New Appraised Value (ARV) | $200,000 |
| New Loan (75% LTV) | $150,000 |
| Cash Back to You | $10,000 ($150k Loan - $140k Cost) |
In this example, you own a cash-flowing rental property with $50,000 in equity, and you actually got paid $10,000 to buy it. This is the power of BRRRR.
Run Your Own Numbers
Use our specialized calculator to see if your next deal works.
Open BRRRR CalculatorFrequently Asked Questions
How much money do I need for BRRRR?
You typically need enough for the down payment and rehab costs, often 25-30% of the total project cost, unless using hard money.
What is the 70% Rule in BRRRR?
It suggests you should not pay more than 70% of the After Repair Value (ARV) minus repairs to ensure you can refinance out all your cash.
Can I do BRRRR with a conventional loan?
Yes, but most conventional lenders require a 'seasoning period' of 6 months before you can do a cash-out refinance.
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