The BRRRR (Buy, Rehab, Rent, Refinance, Repeat) method is a real estate investment strategy that details how to flip a distressed property, rent it out, and then use a cash-out refinance to fund further rental property investments.
The BRRRR method differs from conventional investment strategies in two important aspects:
- Targeting already distressed properties
- Refinancing the purchased property to invest in another one
Buy
Purchase a property that needs some TLC to get it up to code and ready to rent. Homes that require some additional maintenance are typically more accessible and chapter to purchase.
Rehab
If the property is distressed, it may require extensive work. Renovate the property to make structural and aesthetic improvements for your future renters.
Rent
Determine an appropriate rental price and find applicants to rent the home.
Refinance
Refinance your home based on its new market value. A cash-out refinance allows you to convert your home equity into cash. The cash can be used to purchase another property.
Repeat
Using the funds from your rental payments and cash-out refinance, you can purchase another property to rehab, rent, and refinance.
Closing Thoughts
The BRRR method can help provide passive income while building your real estate portfolio over time. However, it takes time and patience to rehab, rent, and refinance a home, so it’s important to consider the pros and cons of the strategy before proceeding.