BRRRR Method: Recycling Capital on a London Ontario Duplex

Tanya, a 29-year-old nurse in London, Ontario, had saved $120,000 toward real estate investing. Her goal was ambitious: build a 5-property portfolio within 3 years. The problem: if she deployed $120,000 as a 20% down payment on a single property, she'd be stuck waiting years to save enough for property #2.

She needed a strategy that would let her recycle her capital—buy a property, increase its value through renovation, refinance to pull out most of her initial investment, and redeploy that capital into the next deal. The BRRRR method (Buy, Renovate, Rent, Refinance, Repeat) was designed exactly for this purpose.

Her first target: a side-by-side duplex in London's Old East Village neighbourhood, listed at $340,000. The property was cosmetically dated—original kitchens, worn flooring, outdated bathrooms—but structurally sound. Both units were vacant (the previous owner had self-managed and let the property deteriorate), which actually made renovation easier.

Phase 1 — Buy: Tanya purchased the duplex for $340,000 using a B-lender mortgage at 80% LTV ($272,000 mortgage, $68,000 down payment). The B-lender was necessary because the property's vacant condition didn't qualify for A-lender financing.

Phase 2 — Renovate: Over 10 weeks, she invested $55,000 in both units: new kitchens with quartz countertops, renovated bathrooms, LVP flooring throughout, fresh paint, updated light fixtures, and new appliances. Total investment in the property: $123,000 ($68K down + $55K renovation).

Phase 3 — Rent: Both units were listed and rented within 3 weeks. Unit A: $1,950/month (3-bedroom main floor). Unit B: $1,750/month (2-bedroom upper). Total monthly rent: $3,700.

Phase 4 — Refinance: After 6 months of seasoning (required by the new lender), the property was appraised at $475,000. LendCity arranged an A-lender refinance at 75% LTV ($356,250 mortgage) at 5.3%. The new mortgage paid off the B-lender ($272,000), and Tanya received $84,250 in cash back. After accounting for closing costs, she recovered $113,300 of her $123,000 investment—92% capital recovery.

The BRRRR method typically involves two mortgages. The acquisition mortgage (Phase 1) is often through a B-lender because the property's distressed condition or vacancy may not meet A-lender standards. After renovation and tenant placement, the refinance mortgage (Phase 4) moves to an A-lender at better rates.

The refinance is the value-creation event. The appraised value reflects the post-renovation condition and rental income, which is typically significantly higher than the purchase price. If the appraisal comes in strong, the new mortgage can pay off the acquisition loan and return most (or all) of the investor's initial capital.

Tanya's 92% capital recovery means she has $113,300 available to deploy into her next BRRRR property—nearly the same amount she started with. With $9,700 remaining in the London duplex, her infinite return on that trapped capital generates $1,400/month indefinitely.

After the refinance, Tanya has just $9,700 of her own capital remaining in the London duplex. The property generates $1,400/month in net cash flow ($16,800/year)—on $9,700 in remaining capital, that's a theoretical 173% annual cash-on-cash return. *(Results specific to this transaction; individual outcomes will vary.)*

She recovered $113,300, which she immediately deployed into her second BRRRR: a triplex in Woodstock, Ontario, using the same B-lender acquisition, renovate, refinance sequence. Within 18 months of starting, Tanya owned two cash-flowing properties with just $120,000 in total starting capital.

The London duplex continues to build equity through mortgage paydown ($14,400/year) and modest appreciation. At the current trajectory, Tanya is on pace to complete her 5-property target within her 3-year timeline—all from the same original $120,000 in savings, recycled through the BRRRR strategy.