BRRRR — Buy, Rehab, Rent, Refinance, Repeat
Buy a distressed property below market, fix it, rent it, then refinance to pull most of your capital back out. Done well, you scale a portfolio without locking new capital into each deal. Done poorly, you over-renovate or over-leverage and stall.
BRRRR works because the refinance step is based on the after-repair value (ARV) — if you bought right and renovated well, the new appraised value supports a loan that returns your original capital. Then you do it again.
The math has to clear three hurdles: the all-in cost (purchase + rehab + holding) must be 70–75% of ARV (the lender will lend ~75%, leaving margin for closing); the rent must cover the new debt service with cash flow; and the after-rehab condition must actually appraise — over-renovating in a neighborhood that doesn't support it kills the model.
Risks: construction overruns (budget 15–20% contingency), interest-rate movement during the rehab/refi window, an appraisal that comes in low, regional contractor shortages. Not a beginner strategy — but the most capital-efficient way to scale once you have one cycle under your belt.