The BRRRR Method: Build a Rental Portfolio

Let me tell you about the strategy that changed everything for me as a real estate investor. It’s called BRRRR—Buy, Renovate, Rent, Refinance, Repeat—and it solves the biggest problem most investors face: running out of capital before building a meaningful portfolio.

Here’s the typical investor’s frustration. You scrape together a down payment, buy a rental property, and now you’re starting from zero again. At that pace, building a ten-property portfolio means saving ten down payments. That takes forever.

BRRRR breaks that cycle. When you do it right, you get most or all of your money back after each deal while keeping the property. Then you use that same capital to buy the next one. And the next one. The math gets exciting fast.

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How BRRRR Actually Works

BRRRR is a five-step process, and each step sets up the next one. Here’s the basic flow:

Step	What You’re Doing	Why It Matters
Buy	Acquire below market value	Creates equity from day one
Renovate	Fix it up	Forces appreciation
Rent	Get tenants paying	Creates income, proves value
Refinance	Get a new loan based on new value	Pulls your capital back out
Repeat	Do it again	Builds portfolio with recycled capital

The magic happens at the refinance step. You bought the property cheap, added value through renovation, and now it’s worth significantly more than you paid. When you refinance based on that higher value, you can often pull out everything you put in—sometimes more—while still owning a cash-flowing rental.

That capital goes right into the next deal. Same money, multiple properties. That’s how investors scale quickly without needing new capital for every purchase.

Step 1: Finding the Right Property to Buy

Not every property works for BRRRR. You need something with value-add potential at a price that makes the numbers work.

What are you looking for? Properties selling below market value because they need work. Sellers who are motivated because of divorce, job relocation, inherited property they don’t want, or just desperation to sell. Properties with cosmetic issues that scare off regular buyers but don’t actually cost much to fix.

You’re not looking for teardowns or properties with major structural problems. Those require too much capital and time. The sweet spot is a property that needs updating—new kitchen, fresh paint, flooring, maybe some bathroom work—but is fundamentally solid. Learning to analyze a rental property the right way is essential before committing to any BRRRR deal.

Before you buy, you need to nail down two numbers: the After Repair Value (ARV) and your renovation budget. The ARV is what the property will be worth after you fix it up. If you get this number wrong, the whole deal falls apart at refinancing. Study comparable sales obsessively. Be conservative with your estimate.

Your renovation budget needs to be just as solid. Add contingency—at least 10-15% for things that go wrong, because things always go wrong. If you’re new to renovating, add more. Experienced investors still get surprised by what they find behind walls. Understanding common issues when buying distressed properties helps you budget more accurately.

The refinance stage of BRRRR is where most investors stumble — book a free strategy call with LendCity to make sure your exit financing is locked in before you start the project.

Step 2: Renovate Smart, Not Fancy

The renovation phase is where you create value, but it’s also where deals die if you’re not careful. Your goal is simple: bring the property up to neighborhood standard so it rents quickly and appraises at your target ARV. That’s it.

Don’t over-improve. If every other house on the street has laminate countertops, you don’t need granite. If the neighborhood rents don’t support fancy finishes, don’t install them. Match the market. Create a solid, clean, functional property that appeals to renters and appraisers.

Prioritize what matters: kitchens and bathrooms first, then flooring, paint, and curb appeal. Address any deferred maintenance—roof, windows, mechanicals—even though these aren’t glamorous improvements. Fix safety issues and code violations immediately. Avoid the smart renovation mistakes that cost investors money.

Speed matters in renovation. Every month you’re renovating is a month without rental income while you’re still paying carrying costs. Efficient execution keeps more money in your pocket. That said, don’t sacrifice quality for speed. Poor workmanship creates tenant complaints and maintenance headaches for years.

Find contractors who understand investor priorities. They need to deliver quality work on budget and on schedule. That’s different from custom home builders focused on perfectionism. Build relationships with reliable contractors—they’re worth their weight in gold as you scale up.

Step 3: Get It Rented

Once renovation is done, you need tenants. This step validates your renovation investment by proving the market will pay the rent you projected. Most lenders also require the property to be rented before they’ll refinance—they want to see it performing as a rental, not just a speculation.

Research market rents carefully. Look at what similar properties in your area are actually renting for, not just what landlords are asking. Price too high and you’ll sit vacant while carrying costs eat your profits. Price too low and you’re leaving money on the table every month for years.

Then screen tenants thoroughly. I can’t stress this enough. A bad tenant can cost you more than a year of vacancy through property damage, eviction costs, and missed rent. Take your time. Verify income, check credit, call previous landlords, and confirm employment. The small effort in screening prevents massive headaches later.

Get a solid lease in place that protects your interests while complying with local laws. Document everything. Treat this like a business because it is one.

A successful flip depends on more than the renovation — your financing structure matters just as much. schedule a free strategy session with us and we’ll help you plan the numbers.

Step 4: Refinance and Pull Out Your Capital

This is the payoff step. You bought cheap, added value through renovation, proved the income with tenants, and now you’re going to extract your invested capital while keeping the property.

The refinance process involves getting a new loan based on the property’s current appraised value. If you bought for $100,000, put in $30,000 for renovation, and the property now appraises for $180,000, you can potentially refinance for 75% of that new value—$135,000. That covers your entire investment with $5,000 left over.

You now have a stabilized rental property generating monthly income, and you have your original capital back in your pocket ready for the next deal. That’s the BRRRR magic.

A few things to know about refinancing your investment property: Many lenders require a “seasoning period” between when you bought and when you can refinance based on new value. This is typically six to twelve months. Plan for it in your timeline.

Prepare for the appraisal. Document all your improvements with before and after photos. Provide the appraiser with comparable sales that support your value. Present the property clean and polished—first impressions matter even for appraisers.

Build relationships with lenders who understand BRRRR and investment property refinancing. Not all lenders do, and working with ones who get it makes the process smoother. Investors who’ve flipped houses and learned from 30+ deals know how critical lender relationships are.

Step 5: Do It Again

Now you take that recovered capital and find the next deal. The cycle continues: buy, renovate, rent, refinance, repeat.

As you scale up, the process gets more complex. You’re managing multiple properties while renovating new ones. You’re tracking capital across various projects. You might be working with multiple contractors simultaneously. This is where systems and teams become important.

Many successful BRRRR investors eventually hire property managers to handle the ongoing rental operations, freeing them to focus on finding and renovating the next deal. Others bring on project managers, bookkeepers, or assistants. The goal is sustainable growth without burning out or letting quality slip. If you want to refinance your home to add a rental unit, the BRRRR principles apply there too.

When BRRRR Goes Wrong

I’d be lying if I told you BRRRR always works perfectly. Things can and do go wrong.

Low appraisals are the most common problem. You thought the property would appraise at $180,000 but it comes in at $160,000. Now you can’t pull out all your capital—some of it is stuck in the deal. The fix is better ARV estimation upfront. Be conservative. Study comps obsessively. If you’re wrong, you’re stuck.

Renovation cost overruns eat into your returns or, worse, trap capital in the property. Contingency budgets help, but the real solution is better estimation skills that come with experience. Until you have that experience, be very conservative with your numbers.

Market shifts can hurt you if the rental market softens between when you buy and when you refinance. Rents might come in lower than projected, or values might stagnate. Conservative projections and contingency planning provide cushion against market movements.

Contractor problems can blow your timeline and budget. This is why relationships with reliable contractors matter so much. One bad contractor can turn a profitable deal into a disaster.

Is BRRRR Right for You?

BRRRR isn’t for everyone. It’s more complex than simple buy-and-hold investing. You’re combining acquisition, renovation project management, property management, and financing into one strategy. There are more moving pieces and more ways things can go wrong.

If you’re brand new to real estate, BRRRR might be overwhelming. Consider starting with a simpler buy-and-hold purchase or a house hack to build some experience before tackling a full BRRRR project.

But if you have some experience, understand renovation basics, and are frustrated by the slow pace of traditional investing, BRRRR can accelerate your portfolio growth dramatically. The ability to recycle capital through multiple properties is genuinely powerful for wealth building.

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Frequently Asked Questions

How much capital do I need to start BRRRR investing?

Enough to cover a down payment (often 20%+ for investment properties), your renovation budget, and carrying costs during renovation and stabilization. In lower-priced markets, you might get started with $50,000-$75,000. Higher-cost markets require more. The key is having enough buffer for surprises.

Can I do BRRRR with no money down?

Technically possible through hard money loans, private lending, or partnerships where someone else provides capital. But higher-cost money reduces your margins and increases risk. Most investors start with some personal capital before exploring creative financing.

What happens if my appraisal comes in low?

You have limited options: dispute the appraisal with additional comparable data, wait and refinance later if values improve, or accept leaving capital in the deal. The best solution is accurate ARV estimation from the start so this doesn't happen.

How long does a BRRRR cycle take?

Typically six to twelve months from purchase through refinancing. Shorter is better for capital efficiency, but rushing leads to mistakes. Find the balance that lets you execute quality projects at reasonable speed.

Should beginners start with BRRRR?

BRRRR has more complexity than simple buy-and-hold. Starting with one project and learning through that experience is smart. Some investors do simpler deals first before graduating to BRRRR. Assess your own skills, risk tolerance, and resources honestly.

What is the seasoning period and how does it affect my BRRRR timeline?

Most lenders require you to own a property for six to twelve months before they will refinance based on the new appraised value rather than your purchase price. This seasoning period means you need to budget for carrying costs during that waiting window. Some portfolio lenders or credit unions have shorter seasoning requirements, so shop around.

How do I estimate the After Repair Value accurately?

Study comparable sales of recently renovated properties in the same neighborhood with similar square footage and features. Use at least three to five recent comps and be conservative with your estimate. Working with a real estate agent experienced in investor deals can help validate your ARV assumptions before you commit to a purchase.

The Bottom Line

BRRRR works because it solves the capital constraint that limits most investors. Instead of saving a new down payment for each property, you recycle the same capital through multiple acquisitions while building a portfolio of cash-flowing rentals.

The strategy requires skills across multiple areas—deal finding, renovation, property management, and financing. It’s more complex than passive investing but offers acceleration that passive approaches can’t match.

If you’re ready to put in the work to learn this approach, BRRRR can transform how quickly you build wealth through real estate. The investors who master it build portfolios others can only dream about.

Disclaimer: LendCity Mortgages is a licensed mortgage brokerage, and our team includes experienced real estate investors. While we are qualified to provide mortgage-related guidance, the broader financial, tax, and legal information in this article is provided for educational purposes only and does not constitute financial planning, tax, or legal advice. For matters outside mortgage financing, we recommend consulting a Chartered Professional Accountant (CPA), licensed financial planner, or qualified legal advisor.

Written by

LendCity

Published

January 30, 2026

Reading Time

9 min read

The BRRRR Method: How to Build a Rental Portfolio Without Running Out of Money