BRRRR – What is it

Renovation shows on HGTV are really popular right now. A home owner is living in an outdated house, and they want something more modern. In swoops a team of home renovators who fix up the home and it’s perfect for the family’s needs!

BRRRR is a little like that. BRRRR stands for “buy, rehab, rent, refinance, repeat.” A real estate investor buys a property that is outdated and undesirable, and then fixes it up! Now, the investor has a desirable property. While he or she could sell it and turn a profit, they rent it instead, creating a stream of passive income. If the investor needed a loan to fix up the property, the revenue from the rent pays for that, and once that is paid off, it’s a steady stream of income.

BRRRR is a cyclical process. First, buying a home and fixing it up (making it more valuable). Next, finding a tenant (which should be easy if the renovations went well). Then, a loan to cover costs (if you don’t have enough cash to cover it). Then, finally, a stream of income from the tenants, and you’re off to find a new property to revitalize.

Here are some things to know while considering BRRRR:

  1. Consider getting a short term loan to purchase the property and fix it up, but then refinance the property at the bank to build equity and pay back the loan
  2. Banks typically only refinance up to 75%, so make sure that you are fixing the property up to be worth more than what you paid for it

BRRRR can be a confusing topic, so we’ll jump into more details in the next few blog posts!


Check out this article that inspired this post to learn more: