The BRRRR Strategy: Building Wealth Through Value-Add Real Estate
Master the Buy, Rehab, Rent, Refinance, Repeat strategy to scale your portfolio efficiently.
The BRRRR strategy (Buy, Rehab, Rent, Refinance, Repeat) is a powerful method for building a rental property portfolio while recycling your initial capital.
Here's how it works:
1. Buy: Purchase an undervalued property, typically needing repairs 2. Rehab: Renovate the property to increase its value 3. Rent: Find quality tenants and establish cash flow 4. Refinance: Get a new loan based on the increased after-repair value (ARV) 5. Repeat: Use pulled-out equity to invest in the next property
Example: - Purchase Price: $150,000 - Rehab Costs: $30,000 - Total Investment: $180,000 - After-Repair Value: $250,000 - Refinance at 75% LTV: $187,500 - Equity Pulled Out: $187,500 - $180,000 = $7,500 (plus you still own the property!)
Key considerations: - Need access to short-term financing for purchase and rehab - Requires accurate ARV estimation and rehab budgeting - Must qualify for refinance and meet lender seasoning requirements - Property must cash flow after refinance at higher loan amount - Works best in appreciating markets with value-add opportunities
The BRRRR strategy can accelerate portfolio growth, but requires experience in renovations, financing, and property analysis.