The BRRRR cycle — capital recycles with each repeat
BRRRR is one of the most efficient ways to build a real estate portfolio. The acronym stands for Buy, Rehab, Rent, Refinance, Repeat — and the core idea is to recover most or all of your initial investment through a cash-out refinance, then deploy that same capital into the next deal.
Done right, BRRRR lets you own cash-flowing properties with little to none of your own money left in the deal long-term.
The BRRRR only works if you buy at a significant discount to the after-repair value (ARV). A common rule of thumb is the 70% rule: don't pay more than 70% of ARV minus repair costs. This equity gap is what you'll pull out in the refinance step.
The rehab is where you manufacture equity. Kitchens, baths, flooring, and curb appeal drive the biggest valuation jumps relative to cost. The goal is to get the appraised value as high as possible so your 75% LTV refi returns maximum cash.
Most lenders require 6-12 months of seasoning with a tenant in place before they'll do a cash-out refinance on an investment property. Use this time to document rent rolls and get the property income-stabilized.
After seasoning, you refinance based on the new appraised ARV — not what you paid. A DSCR loan or conventional investment loan at 75% LTV pulls out the equity you manufactured through the buy and rehab. If your numbers were right, you get most or all of your money back.
Purchase price: $80,000
Rehab cost: $25,000
Total invested: $105,000
After-repair value (ARV): $160,000
Refi at 75% LTV: $120,000
Cash returned to investor: $120,000 − closing costs ≈ $115,000
Capital left in deal: ~$0
Monthly rent: $1,400/mo
New DSCR loan payment: ~$850/mo
Monthly cash flow: ~$350+ after expenses
Creative finance supercharges BRRRR. When you acquire a property sub-to with a 2.5-3% existing mortgage, your starting monthly cost is dramatically lower than if you bought with new financing. After 12 months of seasoning, you can refinance at today's ARV — often pulling out enough to cover your entry fee — while still holding a performing asset with a legacy low rate.
Entry fee on sub-to: $20K. After 12 months, 75% LTV refi on $210K ARV returns $157,500 — nearly recovering the full acquisition cost. You keep the asset with a 2.75% rate that no new loan can touch.
We source off-market deals with strong ARV spreads — perfect for BRRRR, sub-to, or buy and hold strategies.
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