BRRRR Method

The BRRRR method is a way to build a rental portfolio while recycling the same pool of cash. You buy a property that needs work, often with cash or a short-term loan, renovate it to force the value up, and place a tenant. Once it is rented and appraises at its after-repair value, you refinance into a long-term loan and take cash out, ideally recovering most or all of what you put in. That freed-up capital then funds the next purchase, and the cycle repeats.

The math turns on two numbers the appraisal and lender control: the after-repair value and the refinance loan-to-value (commonly 70 to 75 percent). If both come in as planned, the cash left in the deal approaches zero and the cash-on-cash return approaches infinity, since the property produces cash flow while tying up none of your own money. The risk is pulling too much out: the larger the cash-out loan, the higher the payment, which can leave the rental cash-flow negative. A conservative after-repair value is the safest way to plan a BRRRR.