What if you could grow your property portfolio by taking the money (typically, another person's cash) you used to acquire one home and recycling it into another residential or commercial property, end over end as long as you like?

That's the property of the BRRRR realty investing technique.

It enables financiers to purchase more than one residential or commercial property with the very same funds (whereas traditional investing needs fresh cash at every closing, and hence takes longer to obtain residential or commercial properties).

So how does the BRRRR technique work? What are its benefits and drawbacks? How do you do it? And what things should you consider before BRRRR-ing a residential or commercial property?

That's what we'll cover in this guide.

BRRRR means buy, rehab, rent, re-finance, and repeat. The BRRRR technique is acquiring appeal because it allows investors to use the exact same funds to acquire multiple residential or commercial properties and thus grow their portfolio faster than standard real estate financial investment approaches.

To begin, the investor finds a good deal and pays a max of 75% of its ARV in money for the residential or commercial property. Most loan providers will only loan 75% of the ARV of the residential or commercial property, so this is essential for the refinancing phase.

( You can either utilize money, hard cash, or private cash to purchase the residential or commercial property)

Then the financier rehabs the residential or commercial property and leas it out to renters to develop constant cash-flow.

Finally, the financier does what's called a cash-out re-finance on the residential or commercial property. This is when a monetary organization provides a loan on a residential or commercial property that the financier already owns and returns the cash that they used to buy the residential or commercial property in the very first place.

Since the residential or commercial property is cash-flowing, the investor is able to pay for this brand-new mortgage, take the money from the cash-out re-finance, and reinvest it into new units.

Theoretically, the BRRRR process can continue for as long as the financier continues to purchase smart and keep residential or commercial properties inhabited.

Here's a video from Ryan Dossey describing the BRRRR process for novices.

An Example of the BRRRR Method

To understand how the BRRRR process works, it may be handy to stroll through a fast example.

Imagine that you find a residential or commercial property with an ARV of $200,000.

You expect that repair expenses will have to do with $30,000 and holding costs (taxes, insurance, marketing while the residential or commercial property is vacant) will be about $5,000.

Following the 75% guideline, you do the following mathematics ...

($ 200,000 x. 75) - $35,000 = $115,000

You offer the sellers $115,000 (limit offer) and they accept. You then discover a hard cash loan provider to loan you $150,000 ($ 35,000 + $115,000) and give them a down payment (your own money) of $30,000.

Next, you do a cash-out refinance and the brand-new lending institution consents to loan you $150,000 (75% of the residential or commercial property's value). You settle the tough cash lender and get your deposit of $30,000 back, which enables you to repeat the process on a brand-new residential or commercial property.

Note: This is just one example. It's possible, for example, that you could get the residential or commercial property for less than 75% of ARV and end up taking home additional money from the cash-out refinance. It's likewise possible that you could pay for all buying and rehab expenses out of your own pocket and after that recoup that money at the cash-out refinance (instead of using personal money or hard money).

Learn How REISift Can Help You Do More Deals

The BRRRR Method, Explained Step By Step

Now we're going to walk you through the BRRRR method one step at a time. We'll discuss how you can discover good deals, secure funds, calculate rehabilitation expenses, bring in quality renters, do a cash-out refinance, and repeat the whole procedure.

The first step is to discover bargains and buy them either with cash, private cash, or hard cash.

Here are a couple of guides we've produced to assist you with discovering high-quality deals ...

How to Find Real Estate Deals Using Your Existing Data
The Ultimate Real Estate Investor Marketing Plan: Better Data, More Deals


We likewise recommend going through our 14 Day Auto Lead Gen Challenge - it only costs $99 and you'll find out how to produce a system that generates leads utilizing REISift.

Ultimately, you do not desire to purchase for more than 75% of the residential or commercial property's ARV. And preferably, you wish to acquire for less than that (this will lead to money after the cash-out re-finance).

If you wish to discover personal money to acquire the residential or commercial property, then try ...

- Connecting to family and friends members
- Making the lending institution an equity partner to sweeten the deal
- Connecting with other entrepreneur and investors on social media


If you desire to find difficult cash to buy the residential or commercial property, then try ...

- Searching for difficult cash lending institutions in Google
- Asking a real estate representative who works with financiers
- Requesting for recommendations to tough money lenders from regional title companies


Finally, here's a fast breakdown of how REISift can assist you find and protect more offers from your existing data ...

The next action is to rehab the residential or commercial property.

Your objective is to get the residential or commercial property to its ARV by spending as little money as possible. You absolutely don't want to spend too much on repairing the home, spending for additional home appliances and updates that the home does not require in order to be valuable.

That doesn't imply you need to cut corners, however. Ensure you hire trustworthy professionals and fix everything that needs to be repaired.

In the video below, Tyler (our creator) will show you how he approximates repair expenses ...

When buying the residential or commercial property, it's best to estimate your repair work costs a bit higher than you expect - there are usually unforeseen repair work that come up throughout the rehab stage.

Once the residential or commercial property is completely rehabbed, it's time to discover renters and get it cash-flowing.

Obviously, you wish to do this as rapidly as possible so you can re-finance the home and move onto purchasing other residential or commercial properties ... but do not hurry it.

Remember: the concern is to find excellent occupants.

We advise using the 5 following criteria when considering renters for your residential or commercial properties ...

1. Stable Employment
2. No Past Evictions
3. Good References
4. Sufficient Income
5. Good Financial History


It's much better to decline a renter because they don't fit the above criteria and lose a couple of months of cash-flow than it is to let a bad tenant in the home who's going to cause you issues down the roadway.

Here's a video from Dude Real Estate that provides some terrific recommendations for discovering high-quality occupants.

Now it's time to do a cash-out re-finance on the residential or commercial property. This will allow you to pay off your tough cash lender (if you used one) and recoup your own expenses so that you can reinvest it into an additional residential or commercial property.

This is where the rubber fulfills the road - if you found a bargain, rehabbed it adequately, and filled it with high-quality renters, then the cash-out re-finance should go efficiently.

Here are the 10 finest cash-out refinance lending institutions of 2021 according to Nerdwallet.

You might likewise find a local bank that wants to do a cash-out refinance. But remember that they'll likely be a flavoring duration of a minimum of 12 months before the lending institution is prepared to offer you the loan - ideally, by the time you're finished with repairs and have discovered renters, this spices period will be completed.

Now you repeat the process!

If you used a private cash lending institution, they may be happy to do another offer with you. Or you might utilize another tough cash lender. Or you might reinvest your money into a brand-new residential or commercial property.

For as long as everything goes smoothly with the BRRRR approach, you'll be able to keep acquiring residential or commercial properties without truly utilizing your own cash.

Here are some pros and cons of the BRRRR genuine estate investing approach.

High Returns - BRRRR needs really little (or no) out-of-pocket money, so your returns should be sky-high compared to standard property investments.

Scalable - Because BRRRR permits you to reinvest the same funds into brand-new systems after each cash-out re-finance, the design is scalable and you can grow your portfolio very quickly.

Growing Equity - With every residential or commercial property you buy, your net worth and equity grow. This continues to grow with gratitude and benefit from cash-flowing residential or commercial properties.

High-Interest Loans - If you're utilizing a hard-money lending institution to BRRRR residential or commercial properties, then you'll likely be paying a high interest rate. The objective is to rehab, rent, and re-finance as quickly as possible, however you'll typically be paying the tough money lending institutions for a minimum of a year or two.

Seasoning Period - Most banks need a "spices duration" before they do a cash-out refinance on a home, which suggests that the residential or commercial property's cash-flow is steady. This is typically at least 12 months and often closer to two years.

Rehabbing - Rehabbing a residential or commercial property has its risks. You'll have to deal with professionals, mold, asbestos, structural insufficiencies, and other unforeseen problems. Rehabbing isn't for the light of heart.

Appraisal Risk - Before you buy the residential or commercial property, you'll desire to ensure that your ARV estimations are air-tight. There's constantly a threat of the appraisal not coming through like you had hoped when re-financing ... that's why getting a bargain is so darn important.

When to BRRRR and When Not to BRRRR

When you're wondering whether you must BRRRR a particular residential or commercial property or not, there are two questions that we 'd advise asking yourself ...

1. Did you get an outstanding offer?
2. Are you comfortable with rehabbing the residential or commercial property?


The very first question is necessary because a successful BRRRR offer hinges on having discovered a great deal ... otherwise you could get in difficulty when you try to re-finance.

And the second question is very important because rehabbing a residential or is no small task. If you're not up to rehab the home, then you may consider wholesaling rather - here's our guide to wholesaling.

Want to find out more about the BRRRR technique?

Here are a few of our preferred books on the subjects ...

Buy, Rehab, Rent, Refinance, Repeat: The BRRRR Rental Residential Or Commercial Property Investment Strategy Made Simple by David M. Greene
The Book on Estimating Rehab Costs: The Investor's Guide to Defining Your Renovation Plan, Building Your Budget, and Knowing Exactly How Much All Of It Costs by J Scott
How to Buy Real Estate: The Ultimate Beginner's Guide to Starting by Brandon Turner
Final Thoughts on the BRRRR Method

The BRRRR technique is a great method to buy property. It enables you to do so without using your own cash and, more importantly, it permits you to recover your capital so that you can reinvest it into brand-new systems.
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