What to know about the 'buy, refinance, repeat' strategy helping real estate investors scale without tons of cash
· Business Insider
Connor Swofford and Pieter Louw
- To invest in real estate without having to fork over a big down payment, some investors are using the BRRRR method.
- It involves buying a property with potential, renovating it, and renting it out.
- Then, investors can use a cash-out refinance to help fund their next purchase.
Real estate investing can be an effective way to build wealth, but it's not as simple as selecting an index fund, contributing money, and letting it grow.
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Successful real estate investing requires time, strategy, and money — often a significant amount, especially for investors looking to build multi-property portfolios.
To scale without having to save for a new down payment and closing costs for each deal, some investors use a strategy known as "buy, rehab, rent, refinance, repeat," or BRRRR.
The approach involves buying a property with potential, renovating it, and renting it out. Once rented, the next step is to refinance, allowing investors to pull out their original investment, plus any equity they've built, to help fund their next purchase. Banks typically lend up to 70% to 75% of a property's value in a cash-out refinance.
Scaling quickly by recycling capital
When buying an investment property, "you're really looking at at least 20% down," Pieter Louw told Business Insider. He and his childhood friend, Connor Swofford, used the BRRRR strategy to scale from zero to 24 units in 12 months. "Even with a $300,000 or $400,000 property, with closing costs, you have to come up with 60 to 80 grand, which is not very scalable."
Their first deal was a duplex with a carriage house in Buffalo. Two of the three units were ready to rent, while the third required renovations. They said they bought it for $295,000, put about $40,000 into it, and by the time they refinanced, it appraised for $430,000.
"That really kick-started us," said Louw.
They've financed their deals with hard money loans (short-term loans secured by a "hard" asset, such as real estate), sometimes layering in private money for the down payment or renovations. Working with hard money lenders allows them to move faster than traditional banks, though it does come with risk, Swofford said: "It's a big balloon payment, you have to personally guarantee the loan, and there's a bit more paperwork and harder compliance hurdles to clear."
Thanks to Louw's construction background, they can confidently predict their rehab costs and timeline, which is critical for a successful BRRRR.
"The two biggest things are making sure that your construction budget is reasonably accurate," said Louw, "and knowing your purchase price and what the value would be afterward: the ARV."
Carolyn Yu has used the BRRRR method to scale to five properties in two years.
Her strategy centers on buying below market value, improving the property, allowing it to appreciate, and then tapping into the built-up equity to help finance another purchase.
"My strategy is basically to use every property to fund the next one," said the 27-year-old investor seeking early retirement.
A slower, more flexible version of BRRRR
There's more than one way to execute a BRRRR. Financially independent investor Dion McNeeley has experimented with a "live-in BRRRR," and Mike Newton, a Washington State trooper who owns more than 20 rental units, uses what he calls a "slow BRRRR" strategy to reduce risk.
"One of the main concerns with the BRRRR strategy is, what if I don't get the appraisal I want? What if I don't get it remodeled as quickly as I thought I would?" said Newton. "All of a sudden, as I take longer, it now costs me way more money."
Real estate investor Mike Newton and his family.Courtesy of Mike Newton
His "slow BRRRR" strategy works like so: First, he secures private money from individual investors in his local real estate community. There's nothing unique about that step; the key is how he structures the loans. He sets up a five-year interest-only loan term. For example, on a 2025 triplex purchase, he borrowed $60,000 at 10% interest, meaning he owed the lender $6,000 per year, or about $500 a month, with no principal payments.
He'll eventually pay the loan back in a lump sum after he rehabs and refinances the property, but he has plenty of time to do so. He includes a clause that allows him to extend the loan for up to three additional years if the appraisal doesn't meet a specified threshold. He also includes a no prepayment penalty clause.
"If we had some crazy recession or the value didn't come back, I can wait longer and continue to cash flow," he said. "Even though 10% is not a great interest rate, if you're not paying any principal, the actual payment I'm making of $500 a month is less than what a principal and interest payment would be."
When the timing is right, he refinances, pays back the private lender, and moves on to the next deal.
Why some investors are shifting to BRRRR now
For Louisville-based investors Mike Gorius and Kevin Hart, BRRRR is becoming more attractive as market conditions change.
The business partners have primarily focused on house flipping since they started buying real estate together in 2019, but they're leaning more heavily into BRRRR projects in 2026.
A cooling market has made quick resale profits harder to rely on.
They know the strategy isn't risk-free. You still have to make sure your numbers work, and you can hit the value you're expecting, Hart said.
"From the get-go, you still have the risk of rehab and the risk of running correct costs to make sure that you can actually get a good appraisal."
However, compared to flipping, BRRRR offers a more predictable exit.
"You're taking out the risk of the market," explained Hart. Instead of worrying about a flip sitting for months while you're paying interest, "you know that at the end of the rehab you can get a tenant in there and you can immediately refinance with the bank."
It may not yield quick cash like a successful flip, but they're playing the long game.
Read the original article on Business Insider