How the BRRRR method works
BRRRR stands for buy, rehab, rent, refinance, repeat. You buy a property below its potential value, renovate it, rent it out, then refinance based on the new appraised value. If the numbers work, the refinance returns most or all of your cash, which you use on the next property.
The goal: get your cash back
The best BRRRR deals leave little or no cash in the property while still cash flowing after the new, larger mortgage. To get there, your all-in cost usually needs to be at or below the refinance loan-to-value, typically 70–75% of the after repair value.
Watch the refinance terms
Many lenders require 6–12 months of ownership ("seasoning") before they lend on the new appraised value instead of your purchase price. Rates on cash-out refinances for investment property are also higher than on a primary home. Confirm both before you buy.
Cash flow after the refi
Pulling all your cash out is only a win if the property still pays for itself. A larger loan means a larger payment. If cash flow turns negative after the refinance, consider leaving some cash in the deal.
Frequently asked questions
What loan-to-value do lenders allow on a BRRRR refinance?
Most conventional and DSCR lenders allow 70–75% of the appraised value on a cash-out refinance of an investment property, sometimes 80% for rate-and-term refinances.
What is the seasoning period?
The time you must own the property before a lender uses the new appraised value. It is often 6 months, sometimes 12. Some DSCR lenders have shorter or no seasoning requirements.
What does infinite return mean in BRRRR?
If the refinance returns all of your cash and the property still produces positive cash flow, you have no money left in the deal, so the cash on cash return is mathematically infinite.