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THE BRRR STRATEGY

BUY • REHAB • RENT • REFINANCE • REPEAT

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WHAT IS BRRR?

  • BRRR stands for Buy, Rehab, Rent, Refinance, Repeat. It is a real estate investment strategy designed to help investors build a portfolio of rental properties by recycling the same investment capital into multiple deals.
  • Instead of purchasing one rental property and leaving your money tied up, the BRRR strategy allows you to recover much of your initial investment through refinancing after renovations. This recovered capital can then be used to purchase another property, helping you grow your portfolio faster.

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SUBJECT PROPERTY - PINE STREET PROJECT

  • 7-plex with various sized units
  • On-site laundry facility – no in-unit laundry
  • B-class neighborhood – Centrally located, near schools, grocery, shopping, jobs, etc.
  • Large unutilized courtyard/community space
  • Boarded up and off market
  • Local owner – Not a corporation – Easy skiptrace
  • Clearly needed HEAVY renovations!!

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SUBJECT PROPERTY

  • Pine Street Project
  • 7-plex with on-site laundry facility
  • Unit Type/Rents
    • 3 bed/1 bath house - $1950
    • 2 bed/1 bath apart. (X2) - $1600
    • 1 bed/1 bath apart. (X3) - $1250
    • Studio apart. - $850
  • Total Gross Rents = $9750/month ($117,000/year)

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B - UY

Purchase a property below market value that has the potential to increase in value through repairs or renovations.

Look for:

  • Distressed or outdated homes
  • Foreclosures
  • Estate sales
  • Motivated sellers
  • Properties in growing neighborhoods

Goal: Buy with enough equity to create value after renovations.

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R - EHAB

Renovate the property to improve its value and make it attractive to tenants.

Common improvements include:

  • New flooring
  • Interior and exterior paint
  • Kitchen upgrades
  • Bathroom renovations
  • HVAC repairs
  • Roof replacement (if needed)
  • Landscaping
  • Energy-efficient upgrades

Goal: Increase both the property's market value and rental income.

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R - ENT

Once the property is move-in ready, rent it to qualified tenants.

Best practices:

  • Price rent based on market analysis
  • Screen tenants thoroughly
  • Verify employment and income
  • Check references and background
  • Use a written lease agreement

Goal: Generate consistent monthly cash flow.

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R - EFINANCE

After the property has increased in value and is rented, refinance it with a long-term mortgage.

The lender bases the new loan on the property's current appraised value, not what you originally paid.

Benefits:

  • Recover much of your original investment
  • Lower monthly payments
  • Secure long-term financing
  • Continue collecting rental income

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R – EPEAT

  • Use the money you recovered from refinancing as the down payment on your next investment property.
  • Repeat the process to steadily grow your rental portfolio.

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EXAMPLE BRRR DEAL

Item

Amount

Purchase Price

$150,000

Rehab Costs

$40,000

Total Investment

$190,000

After Repair Value (ARV)

$260,000

Rent

$2,100/month

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REFINANCING EXAMPLE

Bank lends 75% of the new appraised value

$260,000 × 75% = $195,000

The refinance pays off your original loan and reimburses most or all of your investment.

Original Investment: $190,000

Refinance Amount: $195,000

Capital Recovered: Approximately $190,000–$195,000 (depending on loan payoff and closing costs)

You now own a cash-flowing rental property and can use the recovered funds to purchase your next investment.

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PINE STREET BRRR DEAL

Item

Amount

Purchase Price

$200,000

Rehab Costs

$650,000

Total Investment

$850,000

After Repair Value (ARV)

$1,150,000 (@ 6.5% cap rate)

Rent

$9,750/month

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REFINANCING EXAMPLE

Bank lends 75% of the new appraised value

$1,150,000 × 75% = $862,500

The refinance pays off your original loan and reimburses most or all of your investment.

Original Investment: $850,000

Refinance Amount: $862,500

Capital Recovered: Approximately $850,000-862,500 (depending on loan payoff and closing costs)

Monthly Net Cashflow: $2000~/month

Retained Equity: $287,500~

You now own a cash-flowing rental property and can use the recovered funds to purchase your next investment.

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VISUAL FLOW

1. BUY

2. Purchase Below Market Value

3. REHAB

4. Increase Property Value

5. RENT

6. Generate Monthly Cash Flow

7.REFINANCE

8. Recover Investment Capital

9. REPEAT

10. Buy Another Rental Property

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KEY NUMBERS TO TRACK

  • Purchase price
  • Rehab budget
  • ARV
  • Monthly rent
  • Cash flow
  • Cash-on-cash return
  • DSCR (Debt Service Coverage Ratio)

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COMMON MISTAKES

  • Overpaying
  • Underestimating repairs
  • Weak tenant screening
  • No cash reserves
  • Ignoring financing costs

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TIPS FOR SUCCESS

  • Build a reliable contractor team
  • Know your market
  • Create detailed budgets
  • Keep accurate records

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PROS & CONS

Pros:

  • Portfolio growth
  • Recycled capital
  • Passive income

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Cons:

  • Rehab risk
  • Financing risk
  • Market changes

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BRRR CHECKLIST

□ Analyze the deal

□ Secure financing

□ Complete rehab

□ Lease property

□ Refinance

□ Repeat

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QUESTIONS & DISCUSSION