The BRRRR Strategy: The Two Numbers That Decide Everything
BRRRR — Buy, Rehab, Rent, Refinance, Repeat — is how investors recycle one pile of capital into many doors. It works exactly as well as two numbers, and no better.
Number 1: cash recovery at the refinance
You buy distressed, renovate, rent it, then refinance at the new appraised value. The bank typically lends 75% of the after-repair appraisal. Your recovered cash = that new loan minus everything you have in the deal.
The discipline: purchase + rehab + costs should sit near 75% of ARV. At that line you pull your whole investment back out ("infinite return" on the capital left in). At 85% of ARV you leave real money buried — which caps how many times you can repeat.
Number 2: post-refi cash flow
The refinance loan is bigger than your acquisition loan — and the property has to cash-flow under the new payment. This is where BRRRR quietly fails: the deal penciled at purchase, then the refi payment ate it. Underwrite the end state first: market rent minus full expense load minus the post-refi debt service. If that number is negative, you've built a treadmill, not a portfolio.
The sequence that protects you
- Lock ARV with real comps before you buy — not hope
- Bid backward from 75% of ARV minus rehab minus a contingency (renovations run over; assume yours will)
- Confirm the refi lender's seasoning requirements (many want 6+ months) and DSCR floor (usually 1.1-1.25) before closing, not after
- Stress-test the refi at +1% interest — if it only works at today's rate, it barely works
Run your numbers in the BRRRR calculator — it computes both deciding numbers at 75% LTV. Or type the address into the analyzer and get the BRRRR verdict alongside five other strategies in 30 seconds.