What Is the BRRRR Strategy?
BRRRR stands for Buy, Rehab, Rent, Refinance, Repeat — a real estate investment strategy that allows investors to build a rental portfolio while recycling the same capital over and over.
The core concept: use short-term financing to acquire and renovate a distressed property, stabilize it as a rental, then refinance into long-term debt to pull out your invested capital and redeploy it into the next deal.
How Private Money Enables BRRRR
Conventional mortgages are poorly suited for the BRRRR strategy because:
- They won't lend on distressed properties
- They require 30–60 days to close
- They don't include renovation financing
The BRRRR Process, Step by Step
Step 1: Buy
Identify a distressed property trading below market value. The deeper the discount, the more equity you create through the rehab.
Target: Purchase price + rehab costs ≤ 75% of ARV
Financing: Hard money loan covering 80–90% of purchase + rehab costs
Step 2: Rehab
Execute the renovation using your hard money lender's construction holdback. Focus on improvements that maximize rental income and appraised value.
Key principle: Every dollar spent on rehab should generate more than a dollar in value.
Step 3: Rent
Place a qualified tenant and establish a rental income track record. Most conventional lenders want to see 1–2 months of rental history before refinancing.
Target: Rent should cover PITI (principal, interest, taxes, insurance) plus a cash flow buffer.
Step 4: Refinance
Once the property is stabilized, refinance into long-term debt. Options include:
- DSCR loans (Debt Service Coverage Ratio) — qualify based on rental income, not personal income
- Conventional investment property loans — require personal income qualification
- Portfolio loans — held by local banks, more flexible underwriting
Step 5: Repeat
Redeploy the returned capital into your next BRRRR deal. Over time, you accumulate rental properties with minimal out-of-pocket capital.
A Real-World BRRRR Example
| Item | Amount |
|---|---|
| Purchase price | $120,000 |
| Rehab cost | $40,000 |
| Total project cost | $160,000 |
| ARV (after-repair value) | $220,000 |
| Hard money loan (85% LTC) | $136,000 |
| Cash invested at purchase | $24,000 |
| Monthly rent | $1,800 |
| Refinance loan (75% of $220K) | $165,000 |
| Cash returned at refinance | $165,000 – $136,000 = $29,000 |
| Net cash invested after refi | $0 (actually $5K returned) |
Private Money Rates and BRRRR Math
The higher cost of hard money is temporary — you're only paying it during the rehab and stabilization phase (typically 6–12 months). Once you refinance into long-term debt, your rate drops significantly.
The key is ensuring your ARV is high enough to support a refinance that returns most or all of your invested capital.
Getting Started With BRRRR and Crystal Capital
Crystal Capital offers hard money loans specifically structured for BRRRR investors:
- Up to 85% of total project cost
- Interest-only payments during the rehab phase
- 12-month terms with extension options
- Fast closings to capture distressed deals