The BRRRR Method can be a powerful way to scale up your real estate investing and maximize the return on your limited capital!

But what is the BRRRR Method, and how exactly can you implement it?

The BRRRR Method for real estate investments consists of five steps:

1. BUY – The investor buys the property. This is usually a distressed property of some sort that requires cash or hard money, and has significant upside on the after-repair value (ARV). 

2. RENOVATE – The investor renovates the property. The level of rehab and quality of the fixtures and finishes will depend on the location, condition, and the specific goals of the investor. 

3. RENT – The investor rents out the property to a tenant at maximum market rent (it’s a fully renovated property and should command high rent). 

4. REFINANCE – The investor does a cash-out refinance. For residential properties, the loan-to-value maximum is typically 75%. In other words, the investor can “get back” 75% of the value of the property (after it has been renovated, so the value should be much higher) in cash when he or she completes the refinance. In a “perfect” BRRRR, it is sometimes possible for an investor to get back off of their initial investment and have no cash tied up in the property. But even if a few thousand dollars are still technically tied up in the property, the end result is often much lower than the 25% down required for most rental properties (see the video below for a much more detailed explanation). 

5. REPEAT! Once the investor has recovered a large percentage of their capital, it’s time to start shopping for the next one and do it again!

Actual Real World Examples: MRRRR Method Case Studies

In the video below, Broker and Investor Jeff Copeland dives into two BRRRR Method case studies (one single family home, and one multifamily property) to really demonstrate the power of the BRRRR Method!