The BRRRR strategy, Buy, Rehab, Rent, Refinance, Repeat, has become the go-to framework for building a rental property portfolio. The key to executing BRRRR successfully is having the right financing at each stage.
Understanding the BRRRR Method
Buy
Acquire a below-market-value property using short-term financing. Bridge loans and hard money loans provide the speed needed to close on investment properties before competitors.
Rehab
Fund renovations that increase property value. Rehab budgets are often built into bridge loan amounts, giving you capital for both acquisition and improvement.
Rent
Once renovations are complete, lease the property to generate rental income. This income becomes the basis for your permanent financing.
Refinance
Replace your short-term bridge loan with long-term permanent financing. DSCR (Debt Service Coverage Ratio) loans evaluate the property's rental income rather than your personal income, making them ideal for investors.
Repeat
Use the equity pulled from the refinance as the down payment on your next property. This recycling of capital is what makes BRRRR a scalable strategy.
Bridge Loans vs. DSCR Loans
| Factor | Bridge Loan | DSCR Loan |
|---|---|---|
| Purpose | Acquisition and rehab | Long-term hold |
| Term | 6 to 18 months | 30 years |
| Rate Type | Higher, short-term | Competitive, fixed |
| Qualification | Property value | Rental income |
| Speed | 1 to 2 weeks | 2 to 4 weeks |
Making BRRRR Work
The BRRRR strategy succeeds when each financing layer works correctly. The bridge loan must cover acquisition plus rehab. The after-repair value must support a refinance that recovers most of your initial investment.
Learn about DSCR loans vs. traditional mortgages for a deeper comparison of your long-term financing options.
According to BiggerPockets, investors using BRRRR can scale to ten or more properties in three to five years using the same initial capital.
Finance your next BRRRR deal through Arkadian Capital's real estate lending partners.
