BRRRR strategy
- Paul Louie
- Jan 15
- 2 min read
The BRRRR strategy (pronounced "brrr," like the chill of a smart investment move) is a powerful real estate investing method that allows you to scale your rental portfolio efficiently by recycling your capital — buying undervalued properties, adding value through renovations, generating rental income, and then refinancing to pull your money back out for the next deal.
It stands for: Buy → Rehab → Rent → Refinance → Repeat
Here's a clear, step-by-step breakdown of how it works, tailored for real estate investors:
Buy Secure an undervalued or distressed property at a discount — ideally well below its potential after-repair value (ARV) — so there's room for significant equity creation.
Rehab (Renovate) Invest in targeted improvements to boost the property's condition, appeal, and market value. This "forced appreciation" creates the equity needed for a strong refinance later.
Rent Place reliable tenants and stabilize the property with consistent rental income. The rents should cover all expenses (mortgage, taxes, insurance, maintenance) while delivering positive cash flow.
Refinance After a seasoning period (typically required by lenders), refinance into a long-term, lower-rate loan based on the improved, higher appraised value. This cash-out refinance returns most — or even all — of your original investment capital (purchase + rehab costs) as tax-free proceeds, while you retain ownership of a cash-flowing rental.
Repeat Deploy the recovered capital into your next property and repeat the cycle, building a growing portfolio of income-producing assets with minimal ongoing out-of-pocket money.
Why BRRRR is a game-changer for investors
It turns one-time capital into a compounding machine: instead of tying up funds forever in a single buy-and-hold or selling for profit like a flip, you keep the property, enjoy ongoing cash flow, and reuse your money indefinitely.
Real-world example
Buy a fixer-upper for $150,000 + $50,000 in rehab = $200,000 total invested
Post-rehab ARV: $320,000
Rent it out for strong monthly cash flow
Refinance into a long-term loan at 75–80% LTV → pull out $240,000+ in cash
Your initial capital is largely recovered (minus fees), ready for the next project — while you own a performing rental.
How Essencap Funding supports your BRRRR success
As a direct lender specializing in real estate investors, Essencap provides the flexible financing solutions you need at every stage:
Bridge loans and fix-and-flip financing for the Buy and Rehab phases — funding purchase + 100% of renovation costs, with fast approvals and closings in as little as 10–15 days.
Long-term rental loans (including cash-flow-based options like DSCR-style underwriting) for the Refinance step — offering stable, amortizing debt to pull equity out and transition into permanent financing.
With our expertise, we help analyze deals, structure funding, and execute quickly — so you can focus on finding and growing great properties.
BRRRR isn't without risks (market shifts, rehab overruns, or appraisal challenges), but with solid execution and the right lending partner, it's one of the most effective ways to build long-term wealth in rentals.
Ready to put BRRRR into action? Contact Essencap Funding today — we're here to fund your vision from acquisition through refinance and beyond!
Comments