The BRRRR Deep Dive: Buy, Rehab, Rent, Refinance, Repeat

BRRRR stands for Buy, Rehab, Rent, Refinance, Repeat. It is the most capital-efficient way to build a rental portfolio. Here is why: you use the same $50K over and over again, and each cycle leaves you with a cash-flowing rental you own.

The full cycle with real numbers.

BUY: You find a distressed property worth $150K after repairs (ARV). You buy it for $100K using hard money or private money. Your down payment is $15K (the lender covers 85%). Closing costs add $3K. Total cash in: $18K.

REHAB: You spend $25K on repairs. Cosmetic updates, new flooring, fresh paint, updated kitchen and bath, landscaping. The house now looks and functions like a $150K property. Total cash in: $43K.

RENT: You place a tenant at $1,400/month. Market rent for comparable properties in the area. After property management ($140/month), insurance ($100/month), taxes ($200/month), and maintenance reserves ($140/month), your monthly cash flow is roughly $820 before your hard money payment.

REFINANCE: After 6 to 12 months of seasoning (depends on the lender), you do a cash-out refinance. The property appraises at $150K. The bank lends you 75% of appraised value: $112,500. You pay off the hard money loan ($100K plus interest, roughly $106K). You pocket roughly $6,500 cash back. Your new mortgage payment is about $750/month at 7% over 30 years.

REPEAT: Monthly cash flow after the refinance: $1,400 rent minus $750 mortgage minus $140 management minus $100 insurance minus $200 taxes minus $140 maintenance = roughly $70/month positive cash flow. Plus you got almost all of your $43K back. That $43K goes into the next deal.

The magic of BRRRR is the refinance. By forcing equity through rehab (you bought at $100K, it is now worth $150K), the bank's loan pays back your original investment. You are left with a rental property, positive cash flow, and your original capital ready for the next purchase.

Five properties in 3 years is realistic with this method. Each cycle takes 6 to 9 months. Start the next deal while the current one seasons for refinance. By year 3, you have 5 properties worth $750K, generating $350 to $500/month combined cash flow, and you only ever invested $50K of your own money.

The catch: BRRRR requires discipline in your purchase price. If you overpay, the refinance will not return all your capital. The 70% rule is your guard rail. Never pay more than 70% of ARV minus rehab costs.

The entire BRRRR strategy lives or dies at the purchase price. Buy right and everything downstream works. Overpay by $10K and your refinance falls short, trapping your capital in the deal.

The BRRRR purchase formula. Maximum purchase price = (ARV x 70%) minus rehab costs. On a $150K ARV property needing $25K in rehab: ($150K x 0.70) minus $25K = $80K maximum purchase price. This gives you a 30% equity cushion after rehab, which is exactly what you need for a 75% LTV refinance to return your capital.

Where to find BRRRR deals.

Wholesalers. The fastest source. Wholesalers bring you off-market deals already under contract. Their assignment fee is baked into the price. If a wholesaler brings you a property at $85K with a $10K assignment fee, the seller is getting $75K. Your all-in cost after rehab ($85K + $25K = $110K) on a $150K ARV property means you are at 73% of ARV. Close enough to make the numbers work.

Direct marketing. The same channels wholesalers use: direct mail, cold calling, driving for dollars. You skip the middleman and get better pricing. A property a wholesaler would sell you at $85K, you might get at $75K going direct to the seller. That extra $10K makes the refinance work perfectly.

MLS deals. Rare but possible. Look for properties listed 30+ days with multiple price reductions. REO (bank-owned) properties. Estate sales. These sometimes hit 70% of ARV, especially in markets where investors are not competing heavily.

Auctions. Tax sales and foreclosure auctions can produce BRRRR deals at 50% to 65% of ARV. The tradeoff: you often cannot inspect the interior, and title issues can delay your timeline.

Negotiation tactics for BRRRR pricing.

Anchor low. Your first offer should be 10% to 15% below your maximum. If your max is $80K, offer $68K to $72K. You need room to negotiate up and still hit your number.

Show your math. Sellers respond to transparency. Show them the ARV, the rehab estimate, your holding costs, and your target profit. When they see the real numbers, your offer makes sense.

Be ready to walk. If a seller will not come down to your number, walk away. There is always another deal. Overpaying on a BRRRR to win a deal is worse than losing the deal entirely.

Speed as a negotiation tool. Sellers in distress value speed over price. Offer to close in 10 to 14 days. That speed premium often gets you $5K to $10K off the asking price.

The purchase is the only variable in BRRRR that you fully control. Rehab costs can surprise you. Rent can fluctuate. Appraisals can come in low. But your purchase price is locked the moment you sign. Get it right.

The rehab phase is where most new BRRRR investors lose money. Not because rehab is hard, but because they skip the planning. A $25K rehab turns into $40K when you do not have a detailed scope of work before your contractor swings a hammer.

Step 1: The Scope of Work (SOW). Walk every room in the property with a clipboard or your phone. Document every repair needed. Not just the big stuff (kitchen, bathrooms, flooring), but the small stuff (outlets, light fixtures, door hardware, caulking, weatherstripping). Group your SOW by category.

Exterior: roof, siding, gutters, landscaping, driveway, fencing. Kitchen: cabinets, countertops, appliances, backsplash, fixtures. Bathrooms: vanity, toilet, tub/shower, tile, fixtures. Flooring: type and square footage per room. Paint: interior and exterior, colors specified. Mechanical: HVAC, plumbing, electrical (age and condition). Misc: doors, hardware, lighting, cleaning, dumpster.

Step 2: Build the Budget. Get 3 bids from contractors for the full SOW. Not 1 bid. Not 2. Three. Compare them line by line. The lowest bid is not always the best. Look for the contractor whose bid is detailed, whose timeline is realistic, and whose references check out.

Budget rule: add 10% to 15% contingency on top of the winning bid. On a $25K rehab, that is $2,500 to $3,750 in contingency. This covers the surprises you will find behind walls and under floors.

Step 3: Hire the Right Contractor. Check references. Actually call them. Ask: did they finish on time? On budget? Would you hire them again? Visit a current or recent job site. Look at the quality of work, cleanliness, and organization. Get a written contract with the full SOW, payment schedule, start date, and completion date.

Payment schedule: never pay more than 30% upfront. A typical structure: 20% at start, 30% at rough-in (framing, plumbing, electrical), 30% at finish work (cabinets, flooring, paint), 20% at final walkthrough and punch list completion.

Step 4: Manage the Project. Visit the job site at least twice per week. Not to micromanage, but to catch problems early. A $200 fix on day 5 becomes a $2,000 fix on day 25. Take photos at every visit. Compare progress to the timeline.

In FlipMantis, the Rehab Estimator lets you build your scope of work room by room with preset cost ranges for your market. The system tracks your budget against actuals so you see overruns in real time. The Rehab Dashboard shows milestones, payment schedules, and contractor info in one view.

Common BRRRR rehab mistakes. Over-rehabbing: you are building a rental, not a luxury flip. Tenants do not need granite countertops and hardwood floors. Use durable, mid-grade finishes. Under-budgeting mechanicals: a $5K HVAC replacement or $3K sewer line repair can blow your entire contingency. Inspect these first. Ignoring the appraisal: your rehab needs to support the ARV you are targeting. Ask your lender what appraisers look for and make sure your rehab hits those marks.

A bad tenant can cost you $5K to $15K in lost rent, damage, and eviction fees. A good tenant pays on time for 3 to 5 years and treats your property like their home. The difference is your screening process.

Setting the right rent. Pull 5 to 10 comparable rentals within 1 mile of your property. Same bedroom count, similar condition, similar square footage. Look at what they rented for (not what they are listed for). Average those rents. That is your target.

Pricing strategy: price at market rent or 3% to 5% below to attract a larger applicant pool and fill the unit faster. A property sitting vacant at $1,500/month costs you $50/day. Renting 2 weeks faster at $1,450/month saves you $700 in vacancy and costs you only $600/year in lower rent. The math favors speed.

Tenant screening criteria. Credit score: minimum 600 (flexible based on market). Income: 3x monthly rent verified through pay stubs or tax returns. Rental history: call previous landlords, specifically the one before the current landlord (current landlords sometimes lie to get rid of bad tenants). Background check: no evictions in the past 5 years, no violent felonies. Employment: currently employed for at least 6 months.

Apply these criteria consistently to every applicant. Document your reasons for approval or denial. This protects you legally and ensures fair treatment.

The lease. Use a state-specific lease template from a local landlord attorney. Key clauses: rent amount and due date, late fee policy (typically $50 after a 5-day grace period), maintenance responsibility (tenant handles under $100, landlord handles over $100), pet policy (if applicable, charge a pet deposit of $250 to $500), lease term (12 months standard for BRRRR properties).

Property management: self-manage or hire out?

Self-manage (saves 8% to 10% of rent) if you own fewer than 5 properties, they are within 30 minutes of your home, and you have systems for rent collection, maintenance requests, and communication.

Hire a property manager (costs 8% to 10% of rent) if you own 5+ properties, they are in different markets, or your time is better spent acquiring more properties.

For BRRRR, many investors self-manage the first 2 to 3 properties and hire a manager once they scale. The management fee ($120 to $150/month per property) eats into cash flow, but it buys time for more acquisitions.

Move-in process. Professional photos before the tenant moves in (documents the property condition). Detailed move-in inspection with the tenant present, both parties sign. Collect first month rent, last month rent, and security deposit before handing over keys. Set up automatic rent collection from day one.

The refinance is the step that makes BRRRR work. It pays back your hard money loan, returns your rehab capital, and locks in a long-term mortgage at a lower rate. Get this step right and you walk away with a performing rental and your cash back in hand.

Seasoning requirements. Most conventional lenders require 6 to 12 months of ownership before they will refinance based on appraised value (not purchase price). Some lenders offer delayed financing exceptions (refinance within 6 months using purchase price). DSCR lenders sometimes have no seasoning requirement at all. Know your lender's rules before you buy the property.

Timeline planning. Buy and close: month 0. Rehab: months 1 to 3 (budget 3 months even if the work takes 6 weeks). Lease up: month 3 to 4. Season: months 4 to 12 (depending on lender). Refinance: month 6 to 12.

Preparing for the appraisal. The appraiser determines your property's value, which determines how much cash you get back. Help them by providing a list of comparable sales (your comps, not theirs). Provide a scope of work showing all improvements made. Make sure the property is clean, well-lit, and shows well. Fix any deferred maintenance (dripping faucets, burned-out bulbs, dirty carpets). Meet the appraiser at the property if possible and walk them through the improvements.

The refinance math. Appraised value: $150K. Loan-to-value: 75%. New loan amount: $112,500. Pay off hard money balance: $106K (original $100K plus 6 months of interest at 12%). Cash back to you: $6,500. Your total cash invested was $43K ($18K purchase costs + $25K rehab). Hard money covered $85K of the purchase. The refinance pays off the hard money ($106K) and you get $6,500 back. Your net cash still in the deal: $43K minus $6,500 = $36,500.

Wait, that is not all your cash back. Here is the key: if you bought at a lower price or rehabbed for less, you get more back. Buy at $90K instead of $100K, and the refinance returns an extra $10K. Rehab for $20K instead of $25K, and another $5K comes back. The tighter your purchase and rehab numbers, the more capital you recycle.

Ideal BRRRR outcome: all-in cost (purchase + rehab + closing) is at or below 75% of ARV. In that case, the refinance returns 100% of your capital. On our example: 75% of $150K = $112,500. If your all-in cost is $110K ($85K purchase + $25K rehab), you get all your money back plus $2,500.

What if the appraisal comes in low? Option 1: wait 3 to 6 months and reappraise (markets move, new comps appear). Option 2: challenge the appraisal with better comps. Option 3: accept a partial cash-out and leave some capital in the deal. Option 4: use a different lender with more favorable appraisal standards.

A low appraisal is not a deal-killer. It just means your capital is tied up a bit longer. The rental still cash flows. You still own the asset. You just cannot recycle that capital as quickly into the next deal.

The Repeat step is where BRRRR turns from a strategy into a wealth-building machine. Every successful cycle frees up capital for the next purchase. The compounding effect is what separates BRRRR investors from one-property landlords.

The compounding timeline.

Year 1: BRRRR #1. Buy at $100K, rehab for $25K, rent at $1,400/month, refinance at $150K ARV. Get most or all of your $43K back. Start BRRRR #2 while #1 seasons for refinance.

Year 1-2: BRRRR #2 and #3. Same formula, different properties. Each cycle takes 6 to 9 months. By the end of year 2, you own 3 properties worth $450K total. Combined cash flow: $150 to $250/month after all expenses and mortgages.

Year 2-3: BRRRR #4 and #5. By now you have relationships with lenders, contractors, and property managers. Deals move faster. Your capital base has grown from cash flow and any leftover refinance proceeds. Five properties worth $750K. Combined cash flow: $250 to $500/month.

Common mistakes in the Repeat phase.

Mistake 1: scaling too fast. Your contractor is booked on your current rehab. Your lender is processing your current refinance. Your property manager is leasing your current unit. Adding a fourth simultaneous project creates chaos. Stagger your deals. One active rehab at a time until you have systems to handle more.

Mistake 2: loosening your buy criteria. Deal #1 was at 68% of ARV. Deal #5 is at 78% of ARV because you got impatient. That 10% difference means the refinance will not return your capital. Stick to your numbers. The market always produces deals if you are patient.

Mistake 3: ignoring cash flow. BRRRR is not just about equity. Every property needs to cash flow positive after the refinance. If a deal forces you to choose between getting your capital back (higher leverage) and positive cash flow (lower leverage), lean toward cash flow. A property that bleeds $200/month will drain your capital stack faster than a slow refinance.

Building your BRRRR team. Lender: you need a go-to hard money or private money lender for acquisitions and a conventional or DSCR lender for refinances. Some investors use the same lender for both. Contractor: a reliable contractor who understands your timeline and budget standards. Having 2 contractors allows you to run overlapping rehabs. Property manager: once you hit 3 to 5 properties, a manager frees your time for acquisitions. Agent or wholesaler: a consistent source of off-market deals at the right price.

The long-term BRRRR vision. 10 properties at $150K ARV each = $1.5M in real estate. Mortgages of roughly $112K each = $1.12M in debt. Equity position: $380K. Monthly cash flow: $500 to $1,000 (after all expenses). Annual cash flow: $6K to $12K. That is with one stack of $50K recycled ten times.

As rents increase and mortgages get paid down, cash flow grows every year. In 15 years, those same 10 properties might generate $3K to $5K/month in free cash flow. That is the BRRRR endgame.