How to Use the BRRRR Method in Real Estate

A Step-by-Step Guide to Buying, Rehabbing, Renting, Refinancing, and Repeating to Grow Your Real Estate Income

Investing in real estate doesn’t always require large amounts of cash or dozens of properties to start. The BRRRR method offers a way to build wealth, one home at a time, by reusing the same investment funds repeatedly.

BRRRR stands for Buy, Rehab, Rent, Refinance, and Repeat. It’s a system where investors buy homes that need work, renovate them to increase their value, rent them out for income, then refinance to pull out equity and start the cycle over with another property. When done right, this approach can turn one investment into many and help create steady, long-term return-on-investment.

What is the BRRRR method?

The BRRRR method is a real estate strategy that combines buying, renovating, and refinancing to expand a portfolio without constantly saving your own money for new down payments. Investors purchase an undervalued property, make improvements, rent it to generate income, and then refinance based on the new, higher value. The money from the refinance is used to buy the next property, continuing the process.

1. Buy

First, find a property that’s worth improving. Investors often look for homes priced below market value, especially those in good rental areas that need mostly cosmetic updates or manageable repairs.

For example, you might find a three-bedroom home listed for $150,000 in a neighborhood where renovated homes sell for around $200,000. The strategy of buying low and improving can help set up a strong return when you refinance later.

2. Rehab

Once the purchase is complete, it’s time to start improving the property. Renovations should make the home safe, functional, and attractive for renters, without going over budget.

You might need to tackle major repairs such as fixing plumbing or upgrading electrical systems. Other updates can be smaller but still make a big impact. New flooring, fresh paint, modern lighting, and clean landscaping often help a home stand out to prospective tenants. A clear plan, a reasonable budget, and dependable contractors will help keep the project on track.

3. Rent

When the work is done, you can focus on finding tenants. Renting the property brings in monthly income that should cover mortgage payments and maintenance while you continue to build equity.

Research comparable rentals in your area to set a competitive rental rate. Screening tenants and providing a detailed lease can prevent problems later. You can manage the property yourself or hire a management company to handle rent collection, maintenance, and tenant communication.

4. Refinance

Refinancing puts your equity to work once your home has been rented and its value has increased. A refinance replaces your existing mortgage with a new loan that reflects the property’s higher appraised value.

Many investors choose a cash-out refinance, which lets them withdraw some of the equity gained through improvements. These funds can then be used for the next investment property, continuing the BRRRR cycle. A well-timed refinance is key to keeping the BRRRR cycle moving efficiently.

5. Repeat

Once you’ve refinanced and recovered your investment funds, you can repeat the process. Investors who follow this strategy consistently and successfully can grow their portfolios one property at a time. With every new BRRRR cycle, both rental income and property equity have the potential to grow. Each completed project can strengthen your financial foundation and add to your long-term income stream.

Success with this method usually comes from careful planning and a clear understanding of local market conditions. Over time, it can become a dependable means of building wealth through real estate.

BRRRR Method Example

To see how this works, imagine an investor purchasing a home that needs some care. The property sells for $150,000, and another $30,000 is spent on improvements such as flooring, paint, and kitchen updates. After the renovations are complete, the home appraises for about $220,000 and rents for roughly $1,800 a month.

A few months later, the investor completes a cash-out refinance, pulling $50,000 in equity from the property. That cash becomes the down payment on another investment home. Repeating the process over time allows the investor to build a portfolio of rental properties that generate monthly income and grow in value.

Pros and Cons of the BRRRR Method

The BRRRR method can be a helpful real estate strategy, especially for investors who want to grow gradually over time. Knowing both the benefits and the challenges makes it easier to decide whether this approach aligns with your goals.

BRRRR Real Estate Pros

Many investors like the BRRRR method for its potential to create long-term value and cash flow. Pros include:

• As property values increase, equity builds, and overall wealth can grow.
• Rental income each month should cover the mortgage and create steady cash flow.
• A successful refinance provides funds to purchase the next property, making it easier to expand without waiting to save enough money for another down payment.
• There are also tax advantages, such as deductions for mortgage payments and property depreciation (assuming you are collecting rental income).

BRRRR Real Estate Cons

These are some challenges to consider before getting started:

• Upfront costs for purchasing and renovating can be substantial.
• In many markets, finding undervalued homes that qualify for financing takes persistence and may require expensive repairs and updates that make profitability unlikely.
• Refinancing depends on property values and lending conditions, which can change.
• Managing several rental properties can take significant time and organization.

BRRRR Method for Beginners

The BRRRR strategy can work for everyone from first-time investors to experienced property owners, but beginners should take extra time to prepare.

If you’re considering this approach, keep these points in mind:

• Start small with one property before scaling up.
• Set a realistic renovation budget and build in a cushion for surprises.
• Partner with trusted contractors (for work you can’t do yourself), as well as a knowledgeable and experienced lender such as Freedom Mortgage.
• Research your local rental market to choose strong investment areas.
• Learn each stage of the process before repeating it.

Understanding the steps thoroughly can help you manage costs, avoid common pitfalls, and stay focused on long-term growth.

Ready to take the next step in real estate investing? Get in touch with our experienced mortgage advisors, who’ve helped thousands of investors just like you.

BRRRR Method FAQs

Here are answers to a few common questions about the BRRRR method.

How Do You Finance a BRRRR?

Most investors start with a conventional, FHA, or VA loan, depending on their eligibility. After building equity, they often use a cash-out refinance or investment property loan to fund the next purchase.

What if You Can’t Refinance With BRRRR?

Sometimes refinancing simply isn’t possible right away. Market shifts, property values, or credit issues can all affect your timing. In that case, keeping the home as a rental for a longer period can still be worthwhile because the loan balance will continue to go down while equity grows. When conditions improve, you can look into cash-out refinancing.

Can You Use the BRRRR Method With No Money?

It is possible to start investing with little or no money, but it takes creativity and planning. Some investors work with partners who provide capital in exchange for shared profits, while others use private lenders or hard money loans to fund their first project. Each option comes with different risks and costs, so be sure to compare them carefully.

How Long Does the BRRRR Method Take?

Every BRRRR project runs on its own schedule. Some investors finish the first cycle within six months, while others need closer to a year or more before they can move to the next property. The timeline often depends on how much work the home needs, how quickly renovations are completed, and when refinancing becomes available.

Final Thoughts: Would the BRRRR Method Work for You?

The BRRRR method gives investors a practical way to grow their wealth through real estate by putting the same dollars to work again and again. It takes time, planning, and steady effort to make it work well, yet many find the approach rewarding (and profitable) because each completed project can add both income and equity.

If you’re considering this strategy, Freedom Mortgage can help you explore loan and refinancing options that support your property investment goals.