How savvy investors used to invest in real estate 101:

• Step 1: Get pre-qualified for a loan

• Step 2. Find an investment property that has strong cash flow

• Step 3. Put 25% down, sit on the property for decades and watch your returns grow every year.

This is the method that most are familiar with when investing in small multifamily real estate.

Over the past 5 years, however, this method is becoming more-and-more difficult to execute. Real estate has increased in value tremendously. I’m talking 60% or more in some areas, when typical appreciation should only be around 2-3% annually!!! 😲 Speculatively, this is due to increased prices of materials from tariffs and vast housing shortages across the United States. This is great for owners, but not so great for investors looking to purchase property.

The problem with the breakneck speeds of appreciation is that rent prices do not keep up with the price of the property. So, although property value has increased by 60%, rents have NOT increased in proportion. Rents can only increase as much as renters are willing to pay (or can afford). This creates a glass ceiling that prevents landlords from spiking rents by 60% when the cost of the property increases by the same.

This creates obvious pressure on investors who can’t afford the debt on an investment and squeezes cash-flow margins. Good deals are harder to find, and risk has increased.

As the economy adjusts and savvy investors look for alternative methods to grow net worth, the traditional method of investing in multifamily does not work like it did 10 years ago. Thus, alternative solutions are coming to fruition, and the BRRRR is becoming king among small investors.

So... What is BRRRR???

BRRRR stands for Buy, Rehab, Rent, Refinance, Repeat. You Buy a run-down property under market value (typically you want 70% of ARV, or after-repair-value), hire contractors to Rehab it, Rent it out, go to a bank and Refinance it for 70-75% of the appraised value, which then allows you to pull some, if not all, of your original investment cash out of the project. Then, with your cash back in hand, allows you to Repeat the cycle on another property.

You can see why this is so appealing to small investors. You are able to pull cash back out of a deal, get a property under market value, force appreciation through rehab, and maximize rents because the place is newly renovated. This significantly increases cash-on-cash return and decreases the pressure of cash flow constraints, allowing investors to scale and work much faster than the traditional method of 25% down and hold.

The BRRRR method is not full-proof. Stringent underwriting is needed to execute these deals well, and even then unplanned issues can arise.

Here’s a perfect example of a BRRRR gone WRONG:

Last week I came across a massive duplex (4b/3ba on each side) that needed, after consulting a contractor, around 150k in interior renovations. I visited the property, which was currently for sale at 240k, and noticed it had undergone new exterior renovations. New roof, paint, and some siding improvements. Curious about putting an offer in, I went to the county auditor’s website and looked at the purchase history for the property. It was purchased in 2025 for………. 361k. OUCH.

This is the perfect example of a BRRRR gone wrong. The current owner bought way over market value, did not correctly estimate how much renovations were going to cost, and now was selling the property for 121k less than what it was purchased for a year prior… So now the owner is stuck paying a mortgage on a property that is producing $0 in monthly cash flow, needs massive renovations, and will likely be sitting on the MLS for months before selling for way less than what it was purchased for.

The BRRRR is an incredible tool in today’s market that allows investors to continue to produce profitable investments. But, like the story depicted above, you can’t purchase and pray everything will work out like you could in the 2010’s. Today’s market requires a higher level of thinking and diligence to be successful.

The BRRRR strategy therefore was born out of necessity—a way to create equity rather than simply hope for it. By purchasing distressed properties below market value, renovating them to increase both rents and appraised value, and refinancing to recover much of the original capital, investors can recycle the same dollars over and over again.

It’s not just a strategy—it’s a system for turning limited resources into financial freedom, and as far as I can tell, it’s here to stay.