BRRRR Strategy Guide: Build Wealth Through Real Estate Investing

The BRRRR strategy has created more millionaire real estate investors than almost any other approach. It's elegant, repeatable, and—when executed correctly—lets you recycle the same capital over and over.

But most guides make it sound easier than it is. Let's break down how BRRRR actually works, with real numbers and honest trade-offs.

What Is BRRRR?

BRRRR stands for:

• Buy — Purchase undervalued property
• Rehab — Renovate to increase value
• Rent — Find quality tenants
• Refinance — Pull out your invested capital
• Repeat — Use that capital on the next deal

The magic: you end up owning a cash-flowing rental property with little to none of your original money left in the deal. Then you do it again.

Why BRRRR Works

Traditional rental investing looks like this:

1. Save $50,000 for down payment
2. Buy one rental property
3. Wait years to save another $50,000
4. Buy second property

BRRRR compresses the timeline dramatically:

1. Invest $50,000 (purchase + rehab)
2. Property appraises for $150,000 after rehab
3. Refinance at 75% LTV = $112,500 loan
4. Original cost was $110,000 → Get most/all capital back
5. Immediately deploy that capital again

Same $50,000 could acquire 3-4 properties in one year instead of one property per decade.

Step 1: Buy Below Market Value

This is where most investors fail. You need to find properties selling for 70-75% of after-repair value (ARV).

Where to find deals:

• Foreclosures and REOs
• Wholesalers
• Direct mail to distressed owners
• Probate properties
• Off-market through networking
• Driving for dollars (vacant properties)

The math that matters:

If ARV = $200,000, you need all-in costs (purchase + rehab + holding) under $150,000 to have room for profit and refinancing.

70% Rule: Maximum Purchase Price = (ARV × 70%) - Repair Costs

Example: $200,000 ARV with $40,000 in repairs $200,000 × 0.70 = $140,000 $140,000 - $40,000 = $100,000 maximum purchase price

Step 2: Rehab Smart

Not all renovations add value. Focus on:

High ROI improvements:

• Kitchen updates (not full gut—refinish cabinets, new counters, appliances)
• Bathroom updates
• Flooring (LVP is king for rentals)
• Paint (interior and exterior)
• Curb appeal

Skip or minimize:

• High-end finishes (tenants don't pay premium for marble)
• Overly custom choices
• Unnecessary additions

Budget for reality: Add 15-20% contingency. Every rehab has surprises. That wall you opened? There's the knob-and-tube wiring nobody mentioned.

Step 3: Rent to Quality Tenants

Your refinance depends on rental income. And your sanity depends on good tenants.

Setting rent:

• Check comparable rentals on Zillow, Rentometer
• Factor in your upgraded finishes
• Price at market—don't leave money on the table, don't get greedy

Tenant screening:

• Credit check (minimum 600-620)
• Income verification (3x rent minimum)
• Rental history (call previous landlords)
• Background check

Property management: Self-managing saves 8-10% but costs time. If you're scaling, a property manager pays for themselves in sanity.

Step 4: Refinance and Recover Capital

This is the BRRRR magic. You need to understand how lenders think.

The refinance equation:

After stabilization (usually 6-12 months), lenders will refinance at 70-80% of appraised value.

Example:

• ARV after rehab: $200,000
• Cash-out refinance at 75% LTV: $150,000 loan
• Your all-in cost: $130,000
• Cash recovered: $150,000 - $130,000 = $20,000 PROFIT + original capital back

Seasoning requirements:

Most lenders require 6-12 months of ownership before cash-out refinance. Some portfolio lenders or credit unions do this faster. Shop around.

HELOC alternative:

If you own your primary residence, a HELOC can fund the initial purchase and rehab. After refinance, pay off the HELOC and repeat. This keeps your powder dry without tying up savings.

Step 5: Repeat

With your capital returned, you do it again. And again.

Scaling considerations:

• Each property adds income but also liability
• Lenders count your debt against you (debt-to-income ratios)
• After 10 conventional mortgages, you'll need portfolio or commercial lending
• Keep reserves (6 months expenses per property minimum)

Real BRRRR Numbers: A Case Study

The deal:

• Purchase price: $95,000 (distressed 3BR/2BA)
• Rehab budget: $35,000
• Closing costs, holding: $8,000
• Total invested: $138,000

After rehab:

• Appraised value: $195,000
• Monthly rent: $1,600

The refinance:

• New loan at 75% LTV: $146,250
• Pay off original financing: -$95,000 (if used hard money)
• Cash back to investor: $51,250 (after closing costs)

The result:

• $0 of investor's original capital left in deal
• Cash-flowing rental ($1,600/month gross)
• $10,000+ in forced equity created

Financing Your BRRRR Deals

You can't BRRRR with a conventional 30-year mortgage upfront. These properties need work and sellers need to close fast.

Initial acquisition options:

Why HELOCs work well for BRRRR:

A HELOC on your primary residence gives you:

• Interest-only payments during rehab
• Rates far lower than hard money (currently 8-9% vs 12-15%)
• No points or origination fees
• Revolving access—pay it down, use it again

Many successful BRRRR investors use their HELOC as their deal fund, then refinance into long-term financing and repeat.

BRRRR Risks (What Could Go Wrong)

Overpaying: If you pay too much, no amount of rehab saves the deal. The 70% rule exists for a reason.

Budget overruns: That $30,000 rehab becomes $50,000. Now your math doesn't work.

Low appraisal: Appraiser doesn't see the value you created. You can't refinance out all your capital.

Bad tenant: Three months of vacancy plus repairs wrecks your first-year returns.

Market shift: Values drop. Your refinance brings less than expected.

Mitigation:

• Conservative underwriting (assume the worst)
• Build contingency into every budget
• Keep cash reserves
• Screen tenants religiously
• Buy in stable markets with multiple demand drivers

Is BRRRR Right for You?

BRRRR works best if you:

• Can accurately estimate rehab costs
• Have access to capital (savings, HELOC, private money)
• Can find deals below market value
• Want to build a rental portfolio
• Have time or team to manage rehab projects

Consider other strategies if you:

• Prefer passive investing (look at syndications)
• Can't handle rehab project management
• Live in a market where deals don't exist

Getting Started

Step 1: Get your financing in order. Know what you can access—HELOC, savings, partnerships.

Step 2: Learn to analyze deals. Use the 70% rule. Practice on Zillow listings until the math becomes automatic.

Step 3: Build your team. Real estate agent who understands investors. Contractor you trust. Lender who knows BRRRR.

Step 4: Find your first deal. It'll take longer than you think. Don't force a bad deal.

Step 5: Execute. Buy, rehab, rent, refinance. Learn what worked and what didn't.

Step 6: Do it again, better.

The Bottom Line

BRRRR isn't a get-rich-quick scheme. It's a methodical approach to building wealth through real estate that works—when you do it right.

The investors who succeed treat it like a business. They underwrite conservatively, budget for reality, and don't let emotions drive decisions.

If you have equity in your current home, a HELOC can be the fuel that powers your BRRRR portfolio. Low-interest, flexible capital that's there when you find the right deal.

Ready to see how much you could access? Check your HELOC options →