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.
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.
Your ARV estimate and renovation budget determine whether you get 100% of your capital back at refinancing or leave tens of thousands stuck in the deal — book a free strategy call with LendCity and we’ll help you pressure-test those numbers before you commit.
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.
Not all lenders handle BRRRR refinances the same way — seasoning periods, LTV limits, and how they treat rental income all vary. Book a free strategy call with us and we’ll match you with lenders who actually understand the BRRRR exit strategy.
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. The ability to recycle capital through multiple properties is genuinely powerful for wealth building.
BRRRR in Canada vs the United States: Key Differences
The BRRRR strategy works in both markets, but refinancing rules and qualification methods differ significantly between Canada and the US.
Refinance Loan-to-Value (LTV):
- Canada: Refinancing allows up to 80% LTV on investment properties. This higher ceiling makes it easier to extract most or all of your invested capital after renovations, especially with strong appraisal values.
- United States: Cash-out refinances on investment properties typically cap at 65-75% LTV. The lower threshold means you may not recover 100% of your capital, requiring more equity to remain in each deal.
Qualification Methods:
- Canada: Refinancing uses traditional income qualification with the mortgage stress test—you must qualify at the higher of your contract rate +2% or 5.25%. This can limit how much you can borrow even when property values support it.
- United States: DSCR (Debt Service Coverage Ratio) loans let you qualify based on the property’s rental income rather than your personal income. No stress test. This makes it easier to BRRRR multiple properties without hitting personal income limits.
Appraisal Approaches:
- Canada: Appraisers typically use comparable sales and cost approach. Renovations that bring properties to neighborhood standards are well-recognized in appraised values.
- United States: Similar appraisal methods, but automated valuations (AVMs) are more common for refinances. AVMs may not fully capture renovation value, requiring investors to specifically request traditional appraisals.
Speed and Timing:
- Canada: Most lenders require 6-12 months of seasoning before allowing cash-out refinancing. Some portfolio lenders offer more flexibility.
- United States: DSCR lenders often allow immediate refinancing after renovations are complete and the property is rented. Some require 6 months, but exceptions exist.
Tax Implications:
- Canada: Refinanced capital is not taxable. Interest on borrowed funds used for investment purposes is tax-deductible.
- US: Similar treatment—refinance proceeds are not taxable income. Canadian investors must navigate withholding tax and treaty implications on US properties.
Frequently Asked Questions
How much capital do I need to start BRRRR investing?
Can I do BRRRR with no money down?
What happens if my appraisal comes in low?
How long does a BRRRR cycle take?
Should beginners start with BRRRR?
What is the seasoning period and how does it affect my BRRRR timeline?
How do I estimate the After Repair Value accurately?
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. Understanding mastering calculated leverage and building wealth with a growth mindset helps you approach debt strategically. The investors who master it build portfolios others can only dream about.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Consult a licensed mortgage professional before making any financing decisions.
Written by
LendCity
Published
January 30, 2026
Reading time
10 min read
BRRRR
Buy, Rehab, Rent, Refinance, Repeat - a real estate investment strategy where you purchase a property below market value, renovate it to increase value, rent it out, refinance to pull out your initial investment, and repeat the process with the recovered capital.
After Repair Value
The estimated market value of a property after all planned renovations and improvements are completed. ARV is a critical calculation for BRRRR investors and house flippers to determine maximum purchase price and projected profit margins.
Cash Flow
The money left over after collecting rent and paying all expenses including mortgage, taxes, insurance, maintenance, and property management.
Refinance
Replacing an existing mortgage with a new one, typically to access equity, get a better rate, or change terms. Investors commonly refinance to pull out capital for purchasing additional properties (cash-out refinance) while retaining ownership of the original property.
Forced Appreciation
An increase in property value driven by the owner's actions rather than general market conditions. Strategies include renovations, increasing rents, reducing vacancies, or cutting operating expenses. In commercial real estate, raising NOI directly increases the property's income-based appraised value.
Down Payment
The upfront cash payment when purchasing a property. For 1-4 unit investment properties, minimum 20% down is required. 5+ unit multifamily can use CMHC MLI Select with lower down payments, and house hackers can put as little as 5% down on owner-occupied 2-4 plexes.
Private Mortgage
A mortgage from a private lender rather than a traditional bank, typically with higher rates but more flexible qualification requirements.
Appreciation
The increase in a property's value over time, which builds equity and wealth for the owner through market growth or forced improvements.
Equity
The difference between a property's current market value and the remaining mortgage balance. If your home is worth $500,000 and you owe $300,000, you have $200,000 in equity. Equity builds through mortgage payments, appreciation, and property improvements.
Value-Add Property
A property with potential to increase value through renovations, better management, rent increases, or adding units.
Appraisal
A professional assessment of a property's market value, required by lenders to ensure the property is worth the loan amount.
Vacancy Rate
The percentage of rental units that are unoccupied over a given period. A critical factor in cash flow analysis, typically estimated at 4-8% for conservative projections.
Property Management
The operation, control, and oversight of real estate by a third party. Property managers handle tenant screening, rent collection, maintenance, and day-to-day operations.
Market Value
The estimated price a property would sell for on the open market under normal conditions. Determined by comparable sales, location, condition, and market demand.
Eviction
The legal process of removing a tenant from a rental property for reasons such as non-payment of rent, lease violations, or property damage. Eviction laws vary by province and typically require landlords to follow specific notice periods and tribunal processes.
Rental Income
Revenue generated from tenants paying rent on an investment property. Gross rental income is the total collected before expenses, while net rental income subtracts operating costs to show actual profitability.
Curb Appeal
The visual attractiveness of a property as viewed from the street, which impacts buyer and tenant interest. Strong curb appeal can justify higher rents, reduce vacancy periods, and increase property values through relatively low-cost improvements like landscaping, fresh paint, and exterior maintenance.
Contractor
A licensed professional hired to perform construction, renovation, or repair work on investment properties. Using licensed and insured contractors is essential for permitted work, as unlicensed contractors can result in voided insurance, property liens, and liability for injuries.
Deferred Maintenance
Necessary repairs and maintenance that have been postponed or neglected, creating a backlog of work that will eventually require attention. Properties with significant deferred maintenance can be value-add opportunities for investors willing to address accumulated issues.
Carrying Costs
The ongoing expenses of holding a property, including mortgage payments, property taxes, insurance, utilities, and maintenance. Understanding carrying costs is essential during renovation periods when the property generates no rental income.
Comparable Properties
Similar properties in the same market area used to establish fair market value or rental rates through comparison of features, location, condition, and recent sale or rental prices. Analyzing comps is essential when determining offer prices and setting competitive rents.
Capital Recycling
The strategy of pulling equity out of existing properties through refinancing and redeploying that capital into new acquisitions. Capital recycling is the engine behind scaling a portfolio without fresh savings for every down payment.
Real Estate Agent
A licensed professional who represents buyers or sellers in real estate transactions, providing market expertise, negotiation skills, and access to the MLS. Working with an investor-friendly agent who understands rental property analysis and financing strategies can significantly impact deal quality.
Hard Money Loan
A short-term loan from private lenders secured by the property itself rather than the borrower's creditworthiness. Hard money loans offer fast approvals and flexible terms but at higher interest rates, commonly used for fix-and-flip projects and bridge financing.
ARV
After Repair Value - the estimated market value of a property after all renovations and improvements are completed. Calculated by comparing to recently sold comparable properties in the area that are in updated condition. ARV is the foundation of the 70% rule and critical for BRRRR and fix-and-flip strategies.
Hover over terms to see definitions. View the full glossary for all terms.