What is BRRRR?

BRRRR, which stands for "Buy, Rehab, Rent, Refinance, and Repeat" is a popular method of real estate investing. Property investors buy a distressed property, fix it up, rent it out, and hold it for the long term. Doing this can be work-intensive but can also be profitable given it can be risky.

The success of this strategy is contingent on property investors being able to find a "diamond in the rough."

  1. You start by finding a poorly maintained property, ideally in a growing neighborhood.
  2. You need to rehab the property so that it becomes habitable. This might mean buying appliances and materials which can be a huge, upfront capital expenditure.
  3. After the property is livable, you need to rent the property out to a tenant. Ideally, you can now charge market rate for the rent given it's an attractive place to live in.
  4. When you place the tenant in, you can go ahead and refinance the property. Since a significant value-add rehab has been completed, the property should theoretically appreciate and you may be able to cash out your original down payment while preserving the same equity in the property.
  5. As things stabilize, repeat this process again.

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