What Is the BRRRR Method?

 BRRRR stands for “buy, rehab, rent, refinance, repeat.” It’s a great way to build up a substantial real-estate portfolio.

Buy

The first step to BRRRR is to buy a property. But not just any property will work, and you can’t enter into a contract lightly. You must be certain that:

• The property is a good value, and you can afford it.
• When repairs are complete, you’ll have significant equity to tap.
• You can generate strong cash flows from rental income.

Rehab

Rehabbing is the first “R” in the BRRRR method. Although HGTV makes it look easy to rehab a property, it’s actually a lot of hard work. You’ll need a great eye for detail, a talented crew, and a good sense of what changes will improve your property value versus what will simply make it look nice.

Rent

Step three, or the second “R” in the BRRRR method, is to rent out your now-completed rehabbed property to someone who will take care of it. This means choosing a great renter who won’t let you down. A strong rental history for your property is going to be important to your future refinance, so look for a stable renter.

Refinance

The fourth step, or the third “R” in BRRRR, is “refinance.” Once your project is done and your renter secured, you’ll talk to the bank about recapturing as much of the equity in your property as possible. The bank, in turn, will need an updated appraisal, a copy of your tenant’s lease, and possibly more information about your own finances. They may also acquire an updated credit report.

Repeat

The last step, if you did the rest correctly, is a piece of cake: repeat. You simply go back to the “B” in BRRRR, and work your way down. Before you choose your next property, it’s a great idea to go over the project you just completed and look at what things you did well and what things you could have done better.