The “buy, renovate, rent, refinance, repeat” strategy. How does it differ from classic flipping?

The strategy involves purchasing a property with potential, renovating it and renting it out. After renting the next step is refinancing, which allows investors to recover the initially invested capital and the developed equity to finance the next investment. Banks grant loans up to 70-75%. property value in the event of refinancing.

Rapid scaling thanks to “recycling” of capital

When purchasing an investment property, “you must take into account at least a 20% own contribution,” says Pieter Louw in an interview with Business Insider. He and his childhood friend, Connor Swofford, used the BRRRR strategy to go from zero to 24 units in 12 months.

— With a property worth 300-400 thousand hole. (approx. PLN 1-1.5 million – ed.) including transaction costs, you need PLN 60-80 thousand. hole. (approx. PLN 200-300 thousand – ed.), which is not easy to scale – he points out.

Their first investment was a duplex with an additional building in Buffalo. Two of the three premises were ready for rent, and the third one required renovation. They bought the property for PLN 295,000. hole. (slightly over PLN 1 million), they invested approx. PLN 40,000. (approx. PLN 145,000) for renovation, and upon refinancing, its value was estimated at PLN 430,000. hole. (over PLN 1.5 million).

“It really gave us the impetus to take action,” says Louw.

They financed their investments with hard money loans (short-term loans secured by a “hard” asset, e.g. real estate), sometimes supplementing them with private capital for own contribution or renovation. Cooperation with such lenders allows you to act faster than with traditional banks, but is associated with risks: – This is a large one-time repayment, you have to personally guarantee the loan, and the formalities and requirements are more stringent – they point out.

Thanks to Louw's construction experience, they can accurately estimate renovation costs and time – which is crucial to the success of the BRRRR strategy.

— The two most important things are a realistic renovation budget and knowing the purchase price and future value of the property – he emphasizes.

See also: Something strange is happening to gold. Is it a good time to buy? “A correction was requested”

Another investor and her approach

Carolyn Yu used the BRRRR method to grow her portfolio to five properties in two years.

Its strategy is to buy below market value, improve the property, increase its value, and then use the accumulated capital to finance subsequent purchases.

— My strategy is for each property to finance the next one – said a 27-year-old investor seeking early retirement.

A slower, more flexible version of BRRRR

There is more than one way to implement a BRRRR strategy. Financially independent investor Dion McNeeley experimented with the so-called live-in BRRRR (the investor lives in the purchased property), and Mike Newton – a police officer from Washington state with over 20 rental properties – uses “free BRRRR” to limit the risk.

— One of the main problems of the BRRRR strategy is: what if the quote isn't what I expect? Or: what if the renovation takes longer? says Newton. “Then suddenly everything starts to cost much more,” he adds.

Its strategy is to raise private capital from investors from the local community. However, the key is how it structures the loans: it sets a five-year interest-only repayment period. For example, when purchasing three premises in one property in 2025, he borrowed PLN 60,000. hole. (approx. PLN 220,000) at 10%. interest rate – which means 6 thousand hole. (approx. PLN 22,000) per year, without repayment of capital.

After renovation and refinancing, he pays the entire amount in one lump sum, but he has plenty of time to do it. The agreement also includes the possibility of extending the loan for another three years and no penalty for early repayment.

— If there was a recession or property values ​​didn't increase, I could wait longer and still generate cash flow – he explains. – Even though 10 percent The high interest rate and the lack of capital repayment mean that the monthly installment is lower, he adds.

When the right moment comes, it refinances the property, repays the private investor and moves on to the next investment.

Why the BRRRR strategy is gaining popularity

For investors Mike Gorius and Kevin Hart of Louisville, the BRRRR strategy becomes more and more attractive as market conditions change.

Since 2019, they have focused mainly on classic flipping (quick purchase, renovation and sale), but in 2026 they are increasingly choosing BRRRR projects.

A cooling market makes quick sales profits more difficult to achieve.

They realize that the strategy is not without risk – you still need to calculate the costs well and achieve the expected value of the property.

– From the very beginning, there is a risk of renovation and incorrect cost calculations, which may affect the final valuation – they point out.

However, compared to flipping, BRRRR gives a more predictable exit from the investment.

“You eliminate market risk,” Hart explains. Instead of worrying that the property will have to wait months to sell, “you know that after renovation you can rent it and refinance immediately.”

Although this strategy does not provide quick profits like a successful flip, investors are playing for the long term.

The above text is a translation from American edition of Business Insider