The BRRRR (Buy, Rehabilitate, Rent, Refinance, Repeat) method is a real estate investment technique in which you purchase a distressed property, fix it up, rent it, cash out refinance it to fund your next BRRRR rental investment property.
A house that needs repairs is the sort of property you should buy. Because of the home’s condition, it might be cheaper to purchase and will be a great deal. Financing will be complex, and you might need to rely on non-conventional funding.
Since the home is in terrible condition, it will need a lot of repairs. In this stage, you’ll remodel the property to make structural, safety, and aesthetic improvements as well as prepare it for renters.
Determine the monthly rental rate and locate renters for the property to obtain a positive cash flow.
Since you have rehabbed the property, it will appraise higher. Do a cash-out refinance, repay the expensive hard money loan, and use the remaining money to fund your next BRRRR purchase.
Buy another property using the funds from the refinance: Since you already have money from your cash-out refinancing in the previous step, you don’t need hard money anymore. You can directly use that to purchase another distressed property and repeat all the steps to buy your second rental property.