The BRRRR method — Buy, Rehab, Rent, Refinance, Repeat — is a powerful strategy for building long-term wealth in real estate. But to get the most out of every deal, you need to structure your project with cash flow in mind from day one.
Here’s how to do it right.
1. Buy Below Market Value
Your profit is made when you buy — not when you sell.
To maximize cash flow, you need to buy properties at a discount. Look for distressed or off-market deals where you can negotiate favorable terms. The lower your acquisition cost, the better your ROI after rehab.
Tip: Aim to be all-in (purchase + rehab) for 70–75% of the ARV (After Repair Value).
2. Plan a Rehab That Adds Value — But Doesn’t Overdo It
Not every property needs granite countertops. Focus your rehab on what will increase rent and value without going overboard.
Prioritize:
- Curb appeal
- Kitchen and bathroom updates
- Mechanical systems (HVAC, plumbing, electrical)
Avoid:
- High-end finishes in low to mid-range neighborhoods
- Over-customization
Keep your scope tight and your budget realistic.
3. Know Your Rent Comps
Before you buy, research nearby rentals to estimate your monthly income. Use platforms like Rentometer or Zillow to check rent comps.
Look for:
- Properties with similar bedroom/bathroom counts
- Comparable square footage
- Similar location and amenities
Being conservative in your rent estimates ensures positive cash flow even in slower markets.
4. Use the Right Financing
Use short-term financing (like a hard money loan) for the purchase and rehab. Then refinance into a long-term rental loan once the property is stabilized.
Structure your financing with:
- Interest-only payments during rehab to preserve cash
- A clear plan for the refinance timeline
- A lender who understands BRRRR deals and can move quickly
5. Refinance Smart
Once the rehab is complete and the property is rented, it’s time to refinance. This is your chance to pull out your invested capital and lock in a cash-flowing rental.
Key considerations:
- Make sure your credit is solid before applying
- Work with lenders that allow cash-out refis based on ARV
- Keep an eye on rates — they directly impact your cash flow
6. Budget for Operating Costs
Cash flow isn’t just rent minus mortgage. Be sure to factor in:
- Property management (if applicable)
- Taxes and insurance
- Vacancy reserves
- Maintenance and repairs
A property that cash flows on paper might not in real life if you ignore these costs.
7. Repeat — With a System
The power of BRRRR is in the repeat. Once your first project is stabilized and refinanced, roll your capital into the next deal.
Create a repeatable system:
- Use the same contractors and lenders
- Build relationships with wholesalers
- Document your rehab and refinance process
Each deal should take less time and deliver more cash flow as you refine your approach.
Final Thoughts
The BRRRR method isn’t just about owning more properties — it’s about owning the right properties, with the right structure, for sustainable cash flow. If you plan your deals wisely, use the right financing, and focus on value, each project can pay you now and build wealth long-term.
