The BRRRR investing strategy has gained popularity among both new and experienced real estate investors. But how does this method work, what are the pros and cons, and how can you be successful? We break it down.
What is the BRRRR Strategy in Real Estate?
Buy-Remodel-Rent-Refinance-Repeat (BRRRR) is a great way to build your rental portfolio and avoid running out of cash, but only when done correctly. The order of this real estate investment strategy is essential. When all is said and done, if you execute a BRRRR strategy correctly, you may not have to put any money down to buy an income-producing property.
How BRRRR Investing Works
- Buy a fixer-upper property below market value.
- Use short-term cash or financing to buy.
- After repairs and renovations, refinance to a long-term mortgage.
- Ideally, investors should be able to get most or all their original capital back for the next BRRRR investment property.
I will explain each BRRRR real estate investing step in the sections below.
How to Do a BRRRR Strategy
As mentioned above, the BRRRR strategy can work well for investors just starting out. But as with any real estate investment, it’s essential to perform extensive due diligence before buying to ensure you are getting an income-producing property.
B – Buy
The goal with a real estate investing BRRRR strategy is that when you refinance the property you pull all the money out that you put into it. If done properly, you’d effectively pay nothing for a property. Plus, you still have 25 percent built-in equity to lower your risk.
Real estate flippers tend to use what’s called the 70 percent rule. The rule is this:
| (After Repair Value X 0.7) – Repairs = Maximum Purchase Price |
Most of the time, lenders are willing to finance up to 75 percent of the value. Unless you can afford to leave some money in your investments and are going for volume, 70 percent is the better option for a couple of reasons.
- Refinancing costs eat into your profit margin
- Seventy-five percent offers no contingency. In case you go over budget, you’ll have a little more cushion.
Your next step is to decide which type of financing to use. BRRRR investors can use cash, a hard money loan, seller financing, or a private loan. We won’t get into the details of the financing options here, but remember that upfront financing options will vary and come with different acquisition and holding costs. There are important numbers to run when analyzing a deal to ensure you hit that 70—or 75—percent goal.
R – Remodel
Planning an investment property rehab can come with all sorts of challenges. Two questions to remember during the rehab process:
- What do I need to do to make the property livable and functional?
- Which rehab decisions can I make that will add more value than their cost?
The quickest and easiest way to add value to an investment property is to make cosmetic improvements. Finishing a basement or garage typically isn’t worth the cost with a rental. The property needs to be in good shape and functional. If your properties get a bad reputation for being dumps, it will hurt your investment down the road.
Here’s a list of some value-add rehab ideas that are great for rentals and don’t cost a lot:
- Repaint the front door or trim
- Refinish hardwood floors
- Add tile
- Improve curb appeal
- Add shutters to front-facing windows
- Add window boxes
- Power wash the house
- Remove outdated window awnings
- Replace ugly light fixtures, address numbers or mailbox
- Clean up the yard with basic lawn care
- Plant grass if the lawn is dead
- Repair broken fences or gates
- Clear out the gutters
- Spray the driveway with weed killer
An appraiser is a lot like a potential buyer. If they pull up to your property and it looks rundown and unkempt, his first impression will undoubtedly impact how the appraiser values your property and affect your overall investment.
R – Rent
It will be a lot easier to refinance your investment property if it is currently occupied by renters. The screening process for finding quality, long-term tenants should be a diligent one. We have tips for finding quality tenants, in our article How To Be a Landlord.
It’s always a good idea to give your tenants a heads-up about when the appraiser will be visiting the property. Make sure the rental is cleaned up and looking its best.
R – Refinance
These days, it’s a lot easier to find a bank that will refinance a single-family rental property. Having said that, consider asking the following questions when looking for lenders:
- Do they offer cash out or only debt payoff? If they don’t offer cash out, move on.
- What seasoning period do they require? In other words, how long you have to own a property before the bank will lend on the appraised value rather than how much money you have invested in the property.
You need to borrow on the appraised value in order for the BRRRR strategy in real estate to work. Find banks that are willing to refinance on the appraised value as soon as the property is rehabbed and rented.
R – Repeat
If you execute a BRRRR investing strategy successfully, you will end up with a cash-flowing property for little to nothing down.
Enjoy your cash-flowing property and repeat the process.
Real estate investing strategies always have advantages and disadvantages. Weigh the pros and cons to ensure the BRRRR investing strategy is right for you.
BRRRR Strategy Pros
Here are some advantages of the BRRRR strategy:
- Potential for returns: This strategy has the potential to produce high returns.
- Building equity: Investors should keep track of the equity that’s building during rehabbing.
- Quality tenants: Better tenants usually translate to better cash flow.
- Economies of scale: Where owning and operating multiple rental properties at once can lower overall costs and spread out risk.
BRRRR Strategy Cons
All real estate investing strategies carry a certain amount of risk and BRRRR investing is no exception. Below are the biggest cons to the BRRRR investing strategy.
- Expensive loans: Short-term or hard money loans usually come with high interest rates during the rehab period.
- Rehab time: The rehabbing process can take a long time, costing you money every month.
- Rehab cost: Rehabs often go over budget. Costs can add up quickly, and new issues may arise, all cutting into your return.
- Waiting period: The first waiting period is the rehab phase. The second is the finding tenants and starting to earn income phase. This second “seasoning” period is when an investor must wait before a lender allows a cash-out refinance.
- Appraisal risk: There is always a risk that your property will not be appraised for as much as you anticipated.
BRRRR Strategy Example
To better illustrate how the BRRRR method works, David Green, co-host of the BiggerPockets podcast and real estate investor, offers an example:
“In a hypothetical BRRRR deal, you would buy a fixer-upper property for $60,000 that needs $40,000 of rehab work. Throw in the same $5,000 for closing costs and you end up with a total of $105,000, all in.
At a loan-to-value ratio of 75 percent, if the property appraises for $135,000 once it’s rehabbed and rented out, you can refinance and recover $101,250 of the money you put in. This means you only left $3,750 in the property, significantly less than the $50,000 you would have invested in the traditional model. The beauty of this is even though I pulled out almost all of my capital, I still added enough equity to the deal that I’m not over-leveraged. In this example, you’d have about $30,000 in equity still left in the property, a healthy cushion.”
Final Thoughts
Many real estate investors have found great success using the BRRRR strategy. It can be an incredible way to build wealth in real estate, without having to put down a lot of upfront cash. BRRRR investing can work well for investors just starting out.
To learn more about different real estate investment strategies, check out all the free resources in RealWealth’s Learning Center.
Frequently Asked Questions
A turnkey rental property is ready for immediate occupancy and available for tenants to rent. It is a fully rehabbed property or a new build, may come with tenants in place, and has property management in place. Investing in turnkey real estate is ideal for busy professionals or investors who want cash flow without the hassle of renovations or property management. Learn more about this investing model in our article Turnkey Real Estate Investing: Your Guide to Hassle-Free Wealth Building.
Turnkey investment properties offer investors immediate cash flow potential from day one, along with professional property management and the ability to diversify across multiple markets. It’s ideal for busy professionals or new investors who want to build long-term wealth without the stress of hands-on renovations or tenant management. Learn more in Turnkey Real Estate Investing: Your Guide to Hassle-Free Wealth Building.
Turnkey property providers are not created equal, and across the industry, there is no standardized definition of what constitutes a turnkey rental property or a turnkey rental company. Some red flags to watch out for are providers who overpromise returns, hide critical details, or fail to meet quality standards. Others may lack third-party inspections, fail to provide transparency about their markets, or have limited experience in property management. Because of this, it’s up to you to thoroughly vet any turnkey real estate company you are considering. Learn how to set yourself up for success and vet providers in Turnkey Real Estate Companies: 8 Red Flags You Need to Know.
The best turnkey companies offer complete transparency, have a proven track record in property management, and possess local market expertise. They should also align with investor goals (such as cash flow, appreciation, or a combination of both) and provide ongoing support, rather than just a one-time sale. RealWealth partners only with vetted property teams that meet our REAL Income Property™ Standards, and RealWealth Investment Counselors provide ongoing support to all our members.
Both strategies build wealth through real estate, but they are suited to different types of investors. Turnkey real estate investing offers ready-to-go properties that generate predictable cash flow with minimal effort, making it an ideal investment option for passive investors. The BRRRR strategy—Buy, Rehab, Rent, Refinance, Repeat—requires more hands-on involvement, greater risk, and potentially higher returns.
Begin by identifying your financial goals, target markets, and level of comfort with risk. Then, work with a turnkey real estate company like RealWealth that connects you with vetted property providers selling off-market turnkey rental properties in the nation’s top markets. It’s 100% free to join, and you’ll receive access to education webinars, property team connections, and ongoing support from an experienced investment counselor. Explore the various types of turnkey rental properties available for sale.
While you can buy a turnkey real estate on your own, we highly recommend joining a real estate investment club like RealWealth (membership is free). Working with a trusted company and provider will save you time and money.
For over 20 years, we’ve been helping people build wealth through real estate, and as investors ourselves, we have experienced the ups and downs of the housing market. With our resources, you can connect with vetted, turnkey property teams in top U.S. markets, as well as other industry resources, including lenders, lawyers, and asset protection specialists.
As a member, you’ll have access to property pro formas, local market insights, and a dedicated Investment Counselor to help you evaluate markets and deals. Once you have chosen a property, review the pro forma, verify the management, and finalize the closing. Your local team then handles operations—so you earn hands-off, passive income from day one.
As a leader in the industry, our members tell us that our free education and resources, direct connections to vetted turnkey property teams, and ongoing support from pros have helped them successfully invest in passive turnkey real estate. Hear directly from RealWealth members who are achieving financial freedom through turnkey investing and real estate syndications.
At RealWealth, we don’t just provide access to turnkey providers; we also offer personalized support from experienced investors. This support is designed to help our members succeed at every step of their investment journey. Join us for free at RealWealth.com and start learning and investing with confidence.
Yes, as a member, you’ll have full access to sample turnkey rental property pro formas that show projected cash flow, ROI, and other key metrics. While you can connect with a property team at any time after joining, we highly recommend scheduling a strategy session with your investment counselor to help tailor your investment strategy to your goals, whether focused on cash flow, appreciation, or a hybrid market approach. Once you connect with one of our vetted property teams, they will send you current inventory—including available turnkey rentals with full pro formas—so you can evaluate potential returns before investing. You can also use analysis software like DealCheck to run your own projections.
The 1% rule helps investors quickly estimate if a potential rental property will generate positive cash flow. This calculation says that the monthly rent should equal at least 1% of the property’s total purchase price, including renovation costs. The 2% rule sets a higher benchmark—2% of the purchase price—but is rare in today’s market. These rules are helpful screening tools, not absolute indicators of performance. Learn more and see examples in “What are the 1% and 2% Rules in Real Estate Investing?”
Yes! Investing out of state can unlock more substantial cash flow, faster growth, and geographic diversification, mainly when you invest in more landlord-friendly, affordable markets. Success hinges on choosing the right market, building a reliable local team, conducting thorough due diligence, and managing remotely with professional services or working with a company like RealWealth that provides direct access to turnkey property teams who sell off-market properties with property management in place. Read our guide to learn more about Out-of-State Real Estate Investing Strategies.
There are several ways to find turnkey rental properties for sale, including the MLS (Multiple Listing Service) and working with real estate investing companies like RealWealth. The method you choose is based on your skill level, investment goals, and the amount of time you have available. Many investors prefer to invest through RealWealth because they have limited time or want to expand their portfolio with low effort. By partnering with us, you can easily connect with vetted property teams that operate in some of the nation’s top-performing metropolitan areas, including Dallas, San Antonio, Indianapolis, Cincinnati, and Birmingham, among others. Each property team offers professionally renovated homes or new build properties with property management in place, making it easy to invest remotely.
When you join RealWealth, you’ll gain access to a vetted network of industry pros like asset protection specialists, lenders, 1031 exchange facilitators, and more, who understand real estate investing and investors. Members can connect directly with these experts to build customized strategies for protecting their rental property portfolios.
Pros: Turnkey investing offers immediate cash flow, since they’re renovated, tenant-ready, and often already have property management in place. That saves you time, stress, and the hassle of renovation and leasing, as well as the day-to-day headaches that come with being a landlord. This makes it an ideal investing strategy for those wanting a more passive income stream.
Cons: Turnkey investment properties typically carry higher upfront costs due to the “rent-ready” premium. Depending on the property provider, renovations may sometimes be superficial or inconsistent in quality, and often rely heavily on the property management company’s competence. You can also face challenges with long-distance ownership (laws, inspections, local oversight). Not all turnkey companies and markets are equal; it’s critical to partner with a reputable turnkey provider and conduct thorough due diligence.
Learn more in Turnkey Real Estate Investing: Your Guide to Hassle-Free Wealth Building.
Section 8 properties are rental homes that accept tenants using government housing vouchers through the U.S. Department of Housing and Urban Development (HUD). Investors receive consistent rent payments directly from local housing authorities, which can provide stability even in changing markets. However, these properties often come with stricter inspections, more paperwork, and longer timelines for tenant placement. Learn more about evaluating rental property strategies in Section 8 Properties for Sale & Why Buy Now, and see if it is right for you.
A variety of professional analysis software is available for real estate investors. We recommend DealCheck, which has a free and paid version. All of our pro formas are created in DealCheck, and RealWealth members receive an exclusive discount on the paid version. Analysis tools like these can be invaluable for understanding the viability of a property. To get more accurate rental prices, we recommend RentCast. These resources make it easier to evaluate returns, compare markets, and make data-driven decisions before making a purchase.
To find rental properties in states with favorable landlord laws, first review RealWealth’s guide on Landlord-Friendly States. Markets like Texas, Florida, Alabama, Georgia, Indiana, Arizona, and North Carolina typically have faster eviction processes, no or limited rent control, and fewer regulatory hurdles for property owners. These locations are commonly included in RealWealth’s vetted turnkey investment opportunities, making them good places to start when looking for landlord-friendly turnkey rental properties.
The cities that tend to offer the best return on investment (ROI) for rental properties combine strong job growth, affordable home prices, and rising rents. RealWealth’s heavily researched markets, including Dallas, San Antonio, Birmingham, Chattanooga, Cleveland, and Indianapolis, consistently rank as top performers. These metros often feature favorable landlord laws and solid rent-to-price ratios, making them ideal for investors looking for cash flow and appreciation. Explore detailed market data and vetted turnkey opportunities in the article Best Places to Buy Rental Property.
Getting started is simple. Join RealWealth for free to access vetted turnkey teams, investment counselors, investor education, and sample property pro formas. Your RealWealth Investment Counselor can help tailor your investing strategy, connect you with trusted teams, and guide you through your purchase—so you can confidently grow your real estate portfolio and build long-term wealth.
