Create value. Then put it to work.
BRRRR is a buy-and-hold strategy: improve a property, establish rent, and explore refinancing so available equity can help fund your next investment.
Buy
Buy with a margin of safety. Use comparable sales, realistic rents, and repair estimates before making an offer.
Before you buy: verify the long-term exit, contractor scope, insurance availability, and local rental demand.
Rehab
Improve the property for your rental market. Prioritize safety, durable finishes, and work that supports the projected value.
Before work begins: agree on milestones, permits, contingency, and the lender’s reimbursement rules.
Rent
Place a qualified tenant at a supportable rent. Budget for vacancy, maintenance, management, and future replacements.
Before refinancing: confirm the lease, rental appraisal requirements, property condition, and reserves.
Refinance
Replace short-term financing with a long-term rental loan. Your appraisal, rent, credit, and lender rules determine the outcome.
Before closing: compare rate, closing costs, prepayment penalties, seasoning, and cash-out limits.
Repeat
Reinvest available capital only after the property is stable and reserves are replenished. Not every deal returns all your cash.
Before repeating: stress-test a lower appraisal, delayed lease-up, higher payment, and major repairs.
Keep the asset.
Build your options.
Renovation can create equity through improvements rather than relying only on market appreciation. Rental income can support ongoing ownership, and refinancing may free up some invested cash without selling.
That flexibility matters when building a portfolio—but leverage magnifies losses as well as returns. A lower appraisal, cost overrun, vacancy, or unavailable refinance can leave more cash tied up than planned.
Ratios worth working toward
DSCR around 1.20× or higher: a useful planning cushion on full PITIA, not a universal lender minimum. It still does not measure all operating expenses.
75% refinance LTV: an illustrative modeling assumption. Eligibility, credit, property, geography, seasoning, and product determine actual leverage.
Cost / ARV below the refinance LTV: creates room for capital recovery before fees. If cost is 72.6% of ARV and refinance LTV is 75%, the margin is thin after costs.
Renovation contingency: model 10–15% as a starting sensitivity, then adjust for scope and uncertainty. Keep separate operating reserves.
Know the strategy. Explore your financing.
Bring your questions. Bring your numbers. Let’s explore what’s possible.