What is the BRRRR method?

The BRRRR method is a popular real estate investment strategy, particularly for those looking to build a rental portfolio efficiently. BRRRR is an acronym that stands for:

1. Buy: Acquire a distressed or undervalued property, often one that needs significant repairs or renovations. The key is to buy below market value.
2. Rehab: Renovate or repair the property to increase its value and appeal. This is where you add “forced appreciation” to the asset.
3. Rent: Once the rehabilitation is complete, find qualified tenants and rent out the property to generate consistent cash flow.
4. Refinance: After the property has been rented for a period (and its value has ideally increased due to the rehab), you refinance the property with a new loan based on its new, higher appraised value. The goal is often to pull out most, if not all, of your initial capital investment.
5. Repeat: Use the capital pulled out from the refinance (tax-free, as it’s a loan) to buy another distressed property, and start the BRRRR cycle again.

The BRRRR method is a powerful strategy for building a real estate portfolio with minimal continuous capital outlay, but it requires expertise in finding deals, managing renovations, and navigating financing. Our investment-focused agents at Better Homes and Gardens Real Estate Equinox can discuss the feasibility of applying such strategies in the Lane County market.