For investors aiming to build wealth and expand rental portfolios efficiently, few strategies rival the popularity of the BRRRR method: Buy, Rehab, Rent, Refinance, Repeat.
This approach allows you to recycle capital from one property into the next—creating a scalable system for long-term success. But to make BRRRR work, you need the right financing partner at each stage of the process.
At Finance of America Commercial, we specialize in helping investors navigate every step of the BRRRR cycle, from short-term acquisition loans to long-term DSCR refinancing. Here’s how it works.
Step 1: Buy – Acquiring the Right Property
The first step is finding an undervalued property with strong rental potential. Investors often target distressed homes, foreclosures, or outdated properties in desirable neighborhoods.
Challenges:
- Competitive markets require fast closings.
- Traditional banks may be too slow or unwilling to finance non-turnkey properties.
How FACo Helps:
- Fix and Flip Loans provide quick access to capital, enabling investors to close fast and outcompete traditional buyers.
- Flexible loan structures let you focus on properties with high upside potential.
Step 2: Rehab – Adding Value Through Renovation
Renovating the property increases both rental income potential and resale value. This is where the “value-add” component of BRRRR happens.
Investor Priorities:
- Stick to a realistic rehab budget.
- Focus on home renovations that boost ARV (After-Repair Value), such as kitchens, bathrooms, and energy-efficient upgrades.
How FACo Helps:
- Our Fix and Flip financing includes funds for renovation, structured as draws tied to your project timeline.
- We understand the realities of construction delays and help investors keep projects moving forward.
Step 3: Rent – Generating Cash Flow
Once the rehab is complete, it’s time to place tenants and start generating income. A strong rent roll validates the property’s long-term potential and sets the stage for refinancing.
Tips for Success:
- Market aggressively to minimize vacancy time.
- Screen tenants thoroughly to ensure reliable cash flow.
- Keep detailed lease agreements and proof of rent to present to lenders during refinancing.
Step 4: Refinance – Unlocking Your Capital
This is the critical step that separates BRRRR from a simple flip. After stabilizing the property with tenants, investors refinance into a long-term loan to:
- Pay off the short-term acquisition/rehab loan.
- Pull out equity through a cash-out refinance.
- Secure 30-year fixed financing for predictable cash flow.
How FACo Helps:
- We offer DSCR rental loans that qualify primarily on property cash flow—not personal income.
- Investors can complete a rate-and-term refinance within 90 days or pursue a cash-out refinance to free up funds for the next purchase.
- With Single Rental Loans and Rental Portfolio Loans, we support both single-property investors and those scaling across multiple assets.
Step 5: Repeat – Scaling Your Portfolio
The beauty of BRRRR is in its repeatability. By recycling your initial capital, you can grow your portfolio faster than with traditional buy-and-hold strategies.
Example:
- An investor purchases a $200,000 distressed property with $50,000 down.
- Renovations cost $40,000, bringing the total investment to $90,000.
- After rehab, the property appraises at $300,000.
- With a DSCR refinance, the investor pulls out enough equity to repay the original loan and recover most of their cash.
- The resulting capital can now buy the next property—and the cycle continues.
Why BRRRR Works Best With the Right Lender
The BRRRR method only works smoothly when each financing stage aligns with your strategy. Using separate lenders for acquisition, rehab, and refinancing can cause delays and reduce profitability.
FACo Advantage:
- Fix and Flip Loans → Fast acquisitions and renovation financing.
- DSCR Long-Term Loans → Seamless transition into stable rental financing.
- Cash-Out Refinance Options → Access capital to fund the next BRRRR cycle.
- Portfolio Solutions → Consolidate multiple rentals into one efficient loan structure.
With FACo, you don’t just get funding, you get a partner who understands how to keep the BRRRR cycle moving without unnecessary friction.
Common BRRRR Mistakes to Avoid
The BRRRR method is powerful, but it’s not foolproof. Many first-time investors, and even experienced ones, run into pitfalls that can slow their progress or wipe out profits. Knowing these common mistakes upfront can help you execute more confidently.
1. Underestimating Rehab Costs
Renovations almost always cost more and take longer than expected. Investors sometimes rely on rough estimates without detailed bids. This leads to budget overruns that shrink profit margins.
How to Avoid It: Build a line-item rehab budget with contractor quotes, and add a contingency reserve of 10–15% for unexpected expenses.
2. Overestimating the After-Repair Value (ARV)
Your refinance hinges on the property’s post-renovation value. If you project too optimistically, you may not be able to pull out as much equity as planned.
How to Avoid It: Use conservative comps from the last 3–6 months. Factor in neighborhood trends and avoid comparing your property to significantly larger or newer homes.
3. Delays in Placing Tenants
Without tenants in place, your refinance options are limited. Delays in marketing, screening, or turnover can stall the BRRRR cycle.
How to Avoid It: Begin marketing before renovations are complete, set realistic rent levels, and streamline tenant screening to minimize downtime.
4. Rushing the Refinance Step
Some investors refinance too quickly, before the property stabilizes. Others wait too long, missing opportunities to recycle capital efficiently.
How to Avoid It: Work with a lender like FACo that understands BRRRR timing. With rate-and-term refinancing available in as little as 90 days, you can transition strategically into long-term financing without stalling your portfolio growth.
5. Using the Wrong Lender
BRRRR requires different loan products at each stage—short-term rehab financing and long-term DSCR refinancing. Using separate lenders unfamiliar with the full cycle can cause misalignment or delays.
How to Avoid It: Partner with an investor-focused lender like FACo that offers both Fix and Flip loans and DSCR loans, ensuring a seamless transition from acquisition to refinance.
6. Forgetting the “Repeat” Step
Some investors execute BRRRR once but fail to leverage the equity to repeat the cycle. This misses the real power of the method: scalable growth.
How to Avoid It: Treat each property as part of a long-term portfolio plan. Track your available equity and line up financing ahead of your next acquisition.
Final Takeaway
The BRRRR method is one of the most powerful wealth-building strategies in real estate. By combining value-add renovations with cash-flow–based refinancing, investors can create a repeatable cycle that grows their portfolios efficiently.
At FACo, we’re here to help at every step—whether you’re acquiring, rehabbing, or refinancing into a long-term rental. Explore our Fix and Flip Loans, Single Rental Loans, or Resources to see how we can fuel your BRRRR journey.
