/BRRRR Investing: The Ultimate Guide to the Buy-Rehab-Rent-Refinance-Repeat Strategy, Made Simple!

BRRRR Investing: The Ultimate Guide to the Buy-Rehab-Rent-Refinance-Repeat Strategy, Made Simple!

What Exactly is the BRRRR Method?

As you’ve grown in your real estate investing education, you’ve no doubt have come across the acronym “BRRRR.” Whether you’re listening to Brandon and me on the podcast, perusing the forums, or reading the blog posts, there’s always someone mentioning BRRRR. In my experience, many people have a basic understanding of what the BRRRR method entails, but don’t quite understand exactly how to pull it off, why it’s so great, or what they should be looking for to utilize it effectively.

I’m here to change that! This article is going to be your all-inclusive guide to understanding the BRRRR strategy from a 30,000-foot view. While I won’t be able to cover everything that goes on in a BRRRR project here, you should definitely leave with a much better understanding of:

  • What the BRRRR strategy is,
  • Why investors are so gung-ho about it, and
  • How learning it will make you an overall better investor.

BRRRR is an acronym that stands for buy, rehab, rent, refinance, repeat. It is the order in which an investor works their way through the “investment cycle” (the buying, rehabbing, refinancing part). When you use the BRRRR strategy, you’re simply moving around the order in which you conduct the various steps of the investment cycle—that’s it!

To put it simply, when you buy a property, fix it up, make it worth more, then refinance, you’re borrowing against the value of the property when it’s at its highest. Done correctly, this allows you to recover more of—or sometimes all of—the money you invested in the property. This helps you in numerous ways, and this blog post is going to highlight some of those, as well as provide you with a roadmap for just how to do it.

If you want to understand why this subtle difference (the order in which you finance) creates such massively advantageous results, you have to start with understanding the traditional method of buying rental property first. It’s only when we contrast the BRRRR method with the traditional method that the vast difference between the two starts to stand out.

The Traditional Method

The traditional method of buying rental property involves buying a property with financing, then rehabbing, renting, and eventually repeating the process later. If we were to break this into an acronym, it would be buy, finance, rehab, rent, repeat (BFRRR). Nobody calls the traditional method “BFRRR” because it would be ridiculous to pronounce—and because so many people purchase property this way, there is no need to have a special name for it. People tend to purchase properties in this manner for several reasons, but the number one reason it’s become so popular is because it’s the most convenient.

When you buy a property using the traditional method, you purchase it with a loan, usually from a bank. For the majority of loan products, this means the investor only needs to come up with a 20-25% down payment. By using financing to buy a property right off the bat, the investor doesn’t have to work as hard to save up the full purchase price, find a hard money or private money lender, etc. The ease of this method can be seductive! Many investors (including myself) bought property this way because it requires the least amount of work. However, like most things in life, what is easiest is often not what is best.

Once the property is purchased with financing, the investor then spends as little money as possible to get the place “rent ready” (the “rehab” portion). This is where many investors make a big mistake. Rather than looking for ways to add value (and increase equity) through their rehab, the investor instead has the primary goal of saving money. As this post will later explain, this is a big mistake that can cost a lot of money in the end. We want to avoid that mistake, and I’m going to share some techniques with you that will help you actually create value in your property during a rehab, not just throw capital away.

The biggest problem with the traditional method is the fact that you are leaving so much money in the problem once you’re finished. Capital gets left in the project in several ways:

  1. When you buy a property under market value (as you should be), the “equity” involved in the sale gets left in the property, not in your bank account (where it can be used to grow your wealth).
  2. When you rehab the property to get it ready to rent, the money you spend on the rehab gets left in the property as well.
  3. When you upgrade certain components of the property (better appliances, a new roof, remodeled bathroom, etc.), you may recover some of this capital by means of higher rents, but the vast majority is lost.
  4. When you can use a loan to buy a property, you tend to focus more on the ROI (return on investment) than you do on the equity in the deal (big mistake). This leads to investors paying more than they should be in too many cases.

How the Traditional Method Eats Up Capital

In short, BRRRR works better because it allows you to recover the capital you would have left in the deal when you bought it with the traditional method. Here’s why.

The traditional method involves putting a percentage of the home’s value down up front, when you first buy it. This is the time when the home’s value is at its lowest point. Think about it. Investors are always looking for deals. If an investor does their job well, they are paying less for a property than it’s worth. Banks base the amount of money they will let you borrow off of the purchase price of a property. If you paying $70,000 for a $100,000 property, the bank is going to let you borrow a percentage of that $70,000.

The percentage a bank lets you borrow is based off of the loan to value (LTV). If a bank lets a borrower borrow 80% LTV, that means the borrower will have to come up with the remaining 20% as a down payment. If a bank offers a 75% LTV, the borrower will have to put 25% down. Higher LTVs equal less money down for the investor.

When you use the traditional method, this down payment gets left in the deal. That means if you are paying $70,000 for the $100,000 home, and you are putting 25% down, you are going to be dropping $17,500 ($70,000 x .25) for the down payment. After that, you’ll need to add money for the rehab.

While every deal is different, it’s not uncommon for a rehab budget on a house purchased with the traditional method to be 20% of the home’s ARV (after repair value). In this example, that would be $20,000 ($100,000 ARV x .2). Let’s say you’re able to get it to half of that, leaving you with a rehab budget of $10,000.

This means you’re leaving $17,500 (down payment) plus $10,000 (rehab) for a total of $27,500 in the deal. When all is said and done, you will have spent $80,000 ($70,000 purchase price + $10,000 rehab) for an investment property worth $100,000. The good news is you’ve gained $20,000 in equity. The bad news is you dropped $27,500 of your hard earned money to do it.

I want you to note three big things here:

  1. Leaving your down payment in the property as equity hurts your ability to buy more properties.
  2. Leaving your rehab budget in the property hurts your ability to buy more properties.
  3. Knowing you’ll leave your rehab budget in the property discourages you from spending more money to create more equity in the property (that can hurt you in the long run).

How the Traditional Method Hurts Your Deal Flow

As you can see, maintaining capital to invest is crucial when it comes to getting better deals and growing your investing prowess. If you want to achieve investing mastery, you need to be active in the game. It’s very difficult to do this using the traditional method because you simply run out of money too fast.

Unless you’re someone who’s got $27,500 laying around in your couch cushions, this money is going to take up a significant amount of time to recover. This hurts your ability to buy more property, which in turn has a significant effect on your ability to grow your wealth. It also stops you from getting to the top of the lists that real estate agents and wholesalers use when it comes to notifying their investors about available properties. Not being on the top of that list is going to cost you more than you may think.

Want to know the number one complaint I hear most investors giving these days? “There aren’t any deals.” While this is a topic for a whole different blog post, there is one thing I want to point out about it. There are definitely still deals out there; they just aren’t making their way to these investors.

Those with the deals decide where they go. That’s just the way it works. Gone are the days (for now) where you could hop on the MLS and find a great, cash-flowing property. In today’s market, you either make a deal or you know someone who has one. If you want to be that person who is the first to be notified of a hot deal, you better be ready, willing, and able to close on it. If you’re not in a position to move quick, someone like me is going to swoop in and buy it before you can.

Why am I still finding deals when others aren’t? It’s because I’m buying more of them. I’m in contact with the wholesalers, I know the agents who are getting them, I’m first on the list of many people who find deals. Why is that? Because I have the capital to buy them! If you want to get the deal first, you have to be in a position to move faster. This oftentimes means having cash available, writing quick and clean offers, and having a team in place to get your due diligence done quickly.

If you’re using a loan to buy properties through the traditional method, this slows you down. Lenders require appraisals, and they also require the property be in livable condition. Many of the best properties aren’t in great shape—that’s why they’re priced so low! If you’re dependent on traditional financing to close a deal, it’s going to slow you down quite a bit. During that time someone like me is going to come in and buy the property right out from under you (and that’s assuming you were notified of the deal in the first place).

To sum it up, if you aren’t doing a decent amount of volume, the deal isn’t coming to you first. If you’re relying on the traditional method to get deals, you’re likely running out of capital quickly, not able to buy the truly distressed properties, and unable to close as quickly. These all hurt your odds of landing the contract first.

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Related: 4 Must-Knows Before Taking on a Distressed Property

How the Traditional Method Hurts Your Wealth Growth

Ever heard the maxim “You make your money when you buy?” It’s true for several different reasons. One of them is the fact that buying properties under market value is the number one thing you can do to grow your wealth. In the example I provided earlier, we spent $80,000 to get a property worth $100,000. This added $20,000 to our net worth (before appreciation, loan pay down, cash flow, etc).

Based on this very simple concept, with every house we buy this way, we can add another $20,000 to our net worth. Doing this every two months (six times a year) would add $120,000 to our net worth. In a little over four years, we would have accumulated a net worth of a million dollars Not too shabby!

So what stops this from happening easily? It’s the fact that it took $27,500 of our cash in order to add that $20,000. Most people have a hard time saving that kind of money, so they can only buy so many properties in a year. This is where the traditional method hurts our ability to grow wealth. It’s clear that buying properties under market value is the number one action we can take to grow our net worth the fastest, but it takes capital to do that. The traditional method of buying rental properties eats up our capital. This prevents us from buying more, slows our growth, and puts a limit on other aspects of investing like getting the best deals first.

If you want to grow your wealth quickly, efficiently, and safely, you need to acquire cash flowing rentals—and you need to acquire them at a good rate of speed. With each new property you buy, you add to our net worth, and you add to your future net worth in the sense of increasing equity and cash flow stockpiling. Buying a rental is like planting a tree. Every year that tree grows bigger, puts off more fruit, and increases in value (most of the time). The wealthiest among us are those who own orchards, not small gardens.

Can you grow an orchard using the traditional method? Maybe if you have a ton of cash laying around. Even then, it would still be slower than if you used the BRRRR method. As I mentioned in the beginning of the article, the BRRRR method allows you to pull much more of your capital out of a deal than the traditional method. This gives you more capital to reinvest, which in turn helps you grow your portfolio faster.

Let’s take a look at the math of the BRRRR method compared to the traditional method.

How the BRRRR Method Helps You Recover More Capital

As I mentioned earlier, here’s how the math breaks down on a deal done with the traditional method:

When you use the traditional method, this down payment gets left in the deal. That means if you are paying $70,000 for the $100,000 home and you are putting 25% down, you are going to be dropping $17,500 ($70,000 x .25) for the down payment. After that, you’ll need to add money for the rehab.

While every deal is different, it’s not uncommon for a rehab budget on a house purchased with the traditional method to be 20% of the home’s ARV (after repair value). In this example, that would be $20,000 ($100,000 ARV x .2). Let’s say you’re able to get it to half of that, leaving you with a rehab budget of $10,000.

This means you’re leaving $17,500 (down payment) plus $10,000 (rehab) for a total of $27,500 in the deal. When all is said and done, you will have spent $80,000 ($70,000 purchase price + $10,000 rehab) for an investment property worth $100,000. The good news is you’ve gained $20,000 in equity. The bad news is you dropped $27,500 of your hard earned money to do it.

The BRRRR method is a little different. Keep in mind, in all likelihood, we will actually be paying less for properties purchased with the BRRRR method than those purchased with the traditional method. This is for several reasons:

  1. We can pay with cash, or at the very least, without a financing contingency
  2. We can buy properties that don’t qualify for traditional financing (better deals)
  3. We can close more quickly and with fewer contingencies (better terms)
  4. We will improve the properties value more through the rehab so we can buy odd homes for less (2-bedroom homes, small square footage, 1-bathroom homes, etc.)

In spite of all this, in this example, we will be assuming we paid the example same amount for a BRRRR property as we did in the traditional example.

So we pay $70,000 for a $100,000 property, then put $10,000 in for repairs. This leaves us all-in for $80,000 on a property worth $100,000. Now, with the BRRRR method, the refinance portion comes after the portion when the house was rehabbed. This means the bank is basing the value of the property on the $100,000 value, not on the $70,000 value we paid for the house. At the same 75% LTV we used in the traditional example, this would mean we refinance and recover $75,000 ($100,000 x .75). Considering we only spent a total of $80,000 to buy and fix up the house, this means we only left $5,000 in the deal.

Compare that to the traditional method where we left $27,5000 in the deal. The BRRRR method returns us $22,5000 we would have left in the deal had we bought it the traditional way. That’s a big difference!

This example is meant to illustrate how BRRRR is more efficient, but it really doesn’t do it justice. In reality, we likely would have spent more than $10,000 on the rehab and pushed our ARV up way beyond the $100,000 I used. By utilizing wealth creation techniques like adding bedrooms, bathrooms, and square footage, we can often spend an extra $10,000-20,000 to create $30,000-50,0000 in value. This can lead to investors pulling more out of a deal than they originally put in (as I’ll cover in more detail later).

Black Belt Investors

The good news for you is that by following the principles that lead to a good BRRRR deal, you will inevitably also follow the same principles that lead to good real estate investing. By focusing on mastering the five elements of BRRRR, you will also master wealth building through real estate. You’ve seen the easy way. Now I’m going to show you the better way.

A black belt martial artist is someone who has practices specific movements, maneuvers, and techniques to the point they can perform them with perfection. Black belts achieve that level of mastery by repetition. That’s an important point to observe.

Any time we want to achieve perfection, it’s going to take a lot of repetition. By conductive the same action over and over, we can get to a point we can perform that action at a very high level. The BRRRR method helps us accomplish this because it’s a much more efficient way to use capital. When you BRRRR, you recover a much higher portion of your capital than when you use the traditional method. Getting this capital back allows you to buy more deals. Buying more deals helps you grow your net worth faster, but it does more than just that. It also helps you get to the top of the lists for wholesalers and agents, ensuring your future success is even more likely. This is all due to the fact that volume helps to create success in business.

Related: How to Leverage Your First House into Multiple Properties (Even With Limited Capital!)

Here’s a few of the ways doing more volume will help your business and make you a black belt investor:

  • Doing more deals builds you a reputation with the community of someone who can close. This means more deals will come your way.
  • Doing more deals will build your own experience, making you smarter, faster, and better (just like a black belt).
  • Doing more deals will get you better rates on your rehab projects from your contractors as you make them more money.
  • Doing more deals will give you a bigger portfolio, allowing you to pay less for property management fees.
  • Doing more deals gives you the flexibility to earn more money by wholesaling, flipping, or selling your properties to other investors, turnkey style.
  • Doing more deals gives you more leverage with local banks to get better financing terms.
  • And more!

As you can see, there is value in volume. If you want to become a black belt investor, you need more repetitions and more practice. This is much easier when you take advantage of the BRRRR method and your ability to create wealth by recovering more capital and buying more real estate.

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Practical Advice for Maximizing the BRRRR Strategy

Now that you see why it’s so superior to the traditional method, I’m going to give you some practical advice for how to win at every level of BRRRR. By focusing on learning the techniques that will help you win at each level, I can virtually guarantee you will begin to win at real estate investing as a whole. Below are some of the ways I win at each level of BRRRR.

BUY

As I said before, you make your money when you buy. The most important thing to get right in real estate investing is to buy properties under market value. BRRRR helps us do this in several ways, and we are going to go over some of them here.

As a general rule, I use a “75%” guideline when I buy real estate. This means I want to be all in for 75% of the ARV of a property if I’m going to buy it. “All in” consists of my acquisition cost (how much I pay) plus my rehab costs (how much I spend to get it ready to be rented out). Why 75%? Because at a 75% LTV (which many banks offer), I can recover 100% of the money I’ve invested. This ensures I never run out of capital and I can continue buying forever.

The simple way to use this formula is to work backwards. Start with your ARV. I recommend having a trusted source like an experienced agent, lender, or other investor give you a conservative number they believe the house will appraise for once it’s been repaired the way you intend. Take that number and multiply it by .75. This is your “target.” Your goal is to get the rehab and the purchase price to add up to this target goal. Remember that when buying, you are looking for problems to solve. Ugly houses, beat-up houses, and neglected house all represent problems waiting for you to solve!

If you get a good enough deal on a property, everything possible can go wrong, and you’ll still do OK. Buying right is your number one goal when it comes to real estate investing, and so it is the same with the BRRRR method. If you pay too much for a property, there is very little you can do to recover from that, so make sure you know your numbers before you close. If you want to have success getting properties under contract, you’ll need to learn what signs you should be looking for with the properties you target.

Below is the rehab portion of the process, and I’ve given you some really good things to target when looking for a property to write an offer on.

REHAB

If you want to hit the target of being all in for 75% of ARV, you’re likely going to be targeting distressed properties. I intentionally look for properties that need massive repairs because I know other investors will ignore them, and the sellers will be more motivated to drop their prices. Some of the best problems to look for are:

  • Roofs that need to be replaced
  • Kitchen that were demoed and not replaced
  • Drywall holes/major damage
  • Horrific landscaping
  • Outdated bathrooms
  • Homes with large square footage but less than three bedrooms

These are all valuable problems for you to solve. They are valuable because appraisers tend to give more value to problems like these when they are repaired than other items that are more cosmetic in nature. By targeting properties like these and making repairs at below market value, you can add big equity to your deals.

  • Roofs: Appraisers will discount a properties value significantly if the roof is at the end of its lifespan. Conversely, if you add a new roof to a property, appraisers tend to give you back the money you spent to add it when they give you the property’s value.
  • Unfinished Kitchen: An outdated kitchen is ugly, but still usable. A partially demoed kitchen makes a house ineligible for financing and therefore much easier for you to buy with cash. In addition to this, if you were going to rip out the kitchen anyway, it’s already partially done! I always target homes with partially demoed kitchens and make big money doing so.
  • Drywall Damage: Drywall damage makes a property ineligible for financing while also scaring away the majority of home buyers. The good news for us is drywall isn’t super expensive to repair. When you see drywall damage, you’ll also often find a vandalized property. These can be some of the best deals you’ll find.
  • Horrific Landscaping: Landscaping is often much uglier than it costs to fix up. Overgrown vegetation can scare away a lot of your competition, but it’s fairly easy and cheap to fix. You don’t need a skilled landscaper to hack down overgrown landscaping, and a few hundred dollars can take you a lot farther than you may think.
  • Outdated Bathrooms: Outdated bathrooms can scare away other buyers, but they don’t need to. I routinely completely remodel bathrooms for $3-5K. Because most bathrooms aren’t very big, the material and labor costs can end up being very low. If you have a contractor with a decent demo guy, you can remodel an entire bathroom pretty cheaply. This will allow your house to compare to much nicer homes in the neighborhood with higher ARVs.
  • Adding Bedrooms: Homes with more than 1,200 square feet but less than three bedrooms offer easy ways to add value. Buying a property like this and adding a third or fourth bedroom will make it compare to much more expensive properties, increasing your ARV. The BRRRR method allows you to spend more money than normal on the rehab process and still recover it at the end!

Here’s the secret to the BRRRR method: It’s all in the rehab process. If you rehab correctly and make sure you add value when you do, you are pretty much guaranteed to recover your money—and then some. If you are going to be refinancing your property at the end of the project, knowing you can push up your ARV through a prudent remodel, you can be more confident that spending more money will result in improving your investment and your net worth.

Related: The Simple 6-Step Process for Estimating Rehab Costs

RENT

Once the remodel is complete, you’ll want to find tenants to occupy your place ASAP. In fact, in some cases, if you advertise your property for rent before the remodel is finished, you can start the write-off period earlier (see more information here).

One benefit to the BRRRR strategy is it rewards you for using better materials in the form of a higher ARV. This oftentimes has a synergistic effect with allowing you to collect higher rent values as well! I always recommend you talk to a property manager you trust before assuming what rent values you’ll get. Property managers with large portfolios establish a good base of knowledge for the areas where they are actively managing properties. This makes them uniquely qualified to give qualified estimates to what you can expect for rent.

If you’re more in the “due diligence” phase than the “time to get on the phone with the property manager” phase, I recommend checking for rental comps on websites like Craiglist.com or Rentometer.com. There is a skill to estimating rental values you need to develop. If you want to learn more about this, there a great article on pulling rental comps here.

One thing to keep in mind with the BRRRR strategy: Your mortgage will typically be slightly higher than with the traditional method because you are borrowing more money against the house. This is well worth it in my opinion because capital in the bank can be used to grow wealth while equity in a property can’t be used for much. The flip side of this argument is that you’re cash flow will be slightly lower with the higher mortgage payment.

This just means you have to be that much more careful when it comes to running rental comps and knowing what you can expect for rent once you purchase your property. If you want to know more about how to quickly analyze a property to make sure it cash flows, check out this article here.

The whole reason real estate investing builds wealth is you can have someone else (the tenant) paying off your debt for you. Don’t mess this part up! Look for properties in areas where tenants want to live with a healthy amount of demand, and make sure your properties are in good enough condition that a high quality tenant will be happy staying there. Try to make sure you have at least three bedrooms in every property you own so tenants are less likely to move when their family grows! Learning tricks like these (while studying the BRRRR method) will ensure you investing success and a growing net worth.

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REFINANCE

The refinance part of BRRRR cycle is where you find out just how well you did. The trick to being successful here is getting as high of an appraised value as you possibly can. A big part of success in this area is a combination of how well you rehabbed your property with how many strong comps you had before you bought it.

One huge deal killer in the BRRRR method is being unable to refinance properties you’ve bought. Sinking a lot of capital into a deal and then being unable to pull it out is a big problem that can stop you in you tracks before you even get started. In order to avoid a scenario like this, I recommend you get pre-approved for a loan before making an offer to buy a property. Talk with lenders beforehand to make sure you know what LTV they are offering, what interest rates are, what their closing costs are, and other important pieces of information like the length of their seasoning period (how long after purchase you have to wait before you can refinance).

Many banks are making buyers wait four to six months right now before they can refinance. That’s OK! Think of this as the period of time in which you can build up your nest egg. If you have a tenant in a property for four months and take two months for the rehab, that’s four months of collecting rent with no mortgage. This allows you to build up a savings account very quickly for the property and can often serve as a healthy reserve fund for the property for the rest of the time you own it! There is always a way to play the cards your dealt, so don’t spend too much time being frustrated over things you can’t change.

Try to find banks that offer higher LTVs—the higher, the better. You want to pull as much money out of your property as possible so that you can reinvest it. Below, I’m going to share some personal deals I’ve done and how the refinances turned out for me. The more value you can add to property through the rehab and the purchase, the more money you’ll be able to refinance at the end.

REPEAT

The “repeat” part of the BRRRR cycle is the most fun. Once you’ve recovered your capital from the deal, you can once again enjoy the thrill of the hunt! For those interested in really perfecting the art of real estate investing, the repeat section is what it’s all about. It is here where you can take everything you learned, everything you gained, and everything you improved upon, and put it back into action as you look for the next deal.

Another part of making your “repeat” work smoother is to build systems. Systems enable you to accomplish the same objective, by repeating the same process, over and over. Systems cut down on mistakes being made. They also cut down on stress. The more documented your systems are, the less you’ll worry about something being missed, overseen, or forgotten about.

Systems also allow you to scale. Once a system is documented, it doesn’t have to be you who does it. At this point, other people can come along and handle the parts of your system documented for them, and you can focus on more important things like finding the next deal, finding the next contractor, or finding the next lender to give you money. Without systems, everything falls on the investor—and there is only so much we can do before we break down or end up moving so slowly our progress is held back.

Personal Examples of the BRRRR Strategy

Why do I love the BRRRR method so much? Because it’s made such a huge impact on my own investing progress. The first three years of my investing career, I bought about a house a year. For the next four years, I bought two, maybe three houses a year. I was working 90 hours a week, saving every dime I could, and pouring it all into real estate. While I built up a portfolio of about 12 houses (nothing to shake a stick at), the fact is I was working so hard and sacrificing so much that it really didn’t make sense in the end.

Then I learned to BRRRR, and my whole world changed. I literally went from buying two houses a year to buying two houses a month. Because I could save money, invest it, recover it, then invest it again, I was able to use the same dollar to buy multiple houses! I continued to earn and save during this process. This gave me even more money to invest! Soon I was rolling, and in a few years got to the point where I could buy around 10-12 houses at a time, refinance them, then reinvest the capital.

You can imagine how my portfolio grew. Yours can too! Below are a sample of BRRRR deals I’ve done, including the numbers and some photos. While no two deals are ever exactly the same, you should get an idea for what a BRRRR deal looks like by studying the following examples. This will help you know what to look for in your own search.

Deal #1: Macarthur

Macarthur was purchased through a real estate agent via the MLS. I paid $76,000, and the rehab budget was $30,000. I put a total of $106,000 into the property. As you can see from the pictures, the bulk of the rehab budget was spent on remodeling the kitchen, repairing the roof, and adding an extra bedroom and bathroom to the property.

I focused on adding a master suite because there was space available to be converted without having to build onto the house. This allowed me to significantly raise my ARV.

Macarthur Before

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Macarthur After
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Macarthur appraised for $135,000 once the rehab was finished. It rents for $1,250 a month, and my total expenses are $805.

This gives me a cash flow of $445 before maintenance and CapEx. I was able to refinance 75% of the appraised value to get back $101,250 ($135,000 x 75%).

If I take the money I left in the deal ($106,000 – $101,250 = $4,750) and divide my yearly cash flow ($445 x 12 = $5,340) by that amount, I get an ROI of 112% ($4,750 / $5,340) for this property. This means I made all of my money back before a year of owning the property had passed.

I added $29,000 to my net worth (appraised value of $135,000 minus my all-in costs of $106,000), $445 to my monthly cash flow, and I recovered the capital I left in the deal after 11 months of having a tenant in place.

Deal #2: Argentine

Argentine was purchased through a wholesaler. I paid $107,500, and the rehab budget was $22,660.

Argentine appraised for $195,000 once the rehab was finished. It rents for $1,395 a month, and my total expenses are $1,100.

This gives me a cash flow of almost $200.

Argentine Before

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how to buy rehab rent refinance repeat

Argentine After
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On this deal, I was all in for around $130,000. After refinancing and pulling out 70% of the $195,000 appraised value, I walked away with a check for $136,000, approximately $6,000 more than I had put into the deal. This means I can’t calculate an ROI because I didn’t have anything “invested” to get a return on!

I added $65,000 to my net worth (appraised value of $195,000 minus my all-in costs of $130,000). Not a bad deal, especially considering I recovered my capital to invest in another property.

Deal #3: Melvin

Melvin was purchased through a real estate agent as an REO property. I paid $35,000, and the rehab budget was $11,600. As you can see from the pictures, the bulk of the rehab budget was spent on carpet, paint, landscaping, and flooring.

I focused on cosmetics because the bones of the house were really good. I originally budgeted to get a new roof on the property, but found out the bank had already ordered one to be put on, and they were paying for it, a huge bonus that made this deal even sweeter!

Melvin Before

Melvin After

Melvin appraised for $85,000 once the rehab was finished. It rents for $795 a month, and my total expenses are $648.

This gives me a cash flow of $147

In this case, I invested a total of $46,600 into the property. The home appraised at $85,000 after the rehab, and the bank let me borrow 75% of that, for a total cash-out of $63,750. This means I walked away with $17,750 more than I put in the deal and cannot calculate an ROI.

I added $38,400 to my net worth ($85,000 – $46,600), $147 a month to my monthly cash flow, and I received $17,750 more capital than I had when I bought the property.

Mastering BRRRR is Mastering Real Estate Investing

There are many things to learn about real estate investing, but if I could advise you to choose one, it might be learning how to BRRRR like a pro. Learning the BRRRR method will force you to learn all the other aspects of real estate investing as well, and this is what will make you a successful investor. If you really break down the entire BRRRR process, you’ll find that mastering each part of it will absolutely lead to you mastering real estate investing! My advice is to look for any book you can on the subject, read every article you can get your hands on, and ask everyone you know who’s done it to teach you what they can.

BRRRR investing is absolutely, 100 percent, without a doubt, the most efficient way to invest in real estate I’ve ever seen. It’s so powerful that I often tell investors not to buy anything until they are able to BRRRR! If there’s only one thing you could study when it comes to investing in real estate, I’d tell you to learn the fundamentals, then go right to BRRRR.

If you live near me, reach out and make sure you get included to free events where I teach investors how they can learn the BRRRR method and grow their business. If you don’t, start looking up online videos, reading books, and listening to the BiggerPockets Podcast. Learning the BRRRR method will change your investing life and have a huge impact on your wealth. I can’t recommend it enough!

Do you use the BRRRR strategy to build your portfolio quickly? Have any questions about the steps in the BRRRR process?

Comment below—and let’s chat BRRRR!