THE BRRRR METHOD: THE BEST WAY TO BUILD REAL ESTATE WEALTH

What is the BRRRR Method & How to Use it to Invest in Real Estate

The BRRRR Method — Buy, Rehab, Rent, Refinance, Repeat — is one of the most effective strategies for building long-term wealth through real estate. It allows investors to recycle their capital, scale faster, and create steady cash flow while building equity.

1. Buy

Successful BRRRR deals start with buying undervalued or distressed properties below market value. Always calculate based on the After-Repair Value (ARV) and aim to keep total costs under 70–75% of ARV. This margin protects your capital and ensures profitability once you refinance.

2. Rehab

Focus on renovations that add real value — fixing major issues like roofs, kitchens, or bathrooms — while avoiding unnecessary luxury upgrades. The goal is to make the property safe, functional, and rent-ready at a cost that increases its appraisal value.

3. Rent

Once rehabbed, place quality tenants quickly. Lenders prefer occupied, income-producing properties during refinancing. Use the 1% rule as a quick test — if monthly rent equals about 1% of the purchase price, you’re likely in a good cash-flow range.

4. Refinance

After stabilizing the property, refinance based on the new appraised value. A cash-out refinance lets you recover most or all of your initial investment, freeing up capital to buy your next property. Choose lenders who allow refinancing on the appraised value, not just the purchase price.

5. Repeat

With your capital back, repeat the cycle to build a scalable rental portfolio. Over time, BRRRR investors gain better contractor pricing, stronger banking relationships, and efficient systems that accelerate growth.

Why BRRRR Beats Traditional Investing

Unlike traditional buy-and-hold investing—where your down payment stays locked in the deal—BRRRR allows you to recycle your money. You recover your cash after each refinance and reinvest it into new opportunities, multiplying your portfolio and net worth much faster.

Pros

• Minimal money left in deals
• High potential ROI and equity growth
• Scalable for portfolio expansion
• Builds experience and leverage

Cons

• Rehab costs and delays can eat profits
• Appraisals may come in low
• Short-term loans carry higher interest
• Managing renovations and tenants takes time

Best For

The BRRRR strategy fits investors with market knowledge, rehab experience, and strong financial discipline. It rewards those willing to put in the work to find deals, manage rehabs, and scale efficiently.

Bottom line:

The BRRRR method turns every dollar into a repeatable investment cycle. When done right, it’s the fastest path to financial freedom and portfolio growth in real estate.

The Parham Team believes in educating and engaging our customers throughout the loan process. We look forward to hearing from you to begin that process. Contact us today at 214-679-3396 or schedule a call with a Loan Specialist.