BRRRR = Buy, Rehab, Rent, Refinance, Repeat - a real estate investing strategy to recycle capital.

Process: (1) Buy distressed property below market value (typically 70-80% of ARV). (2) Rehab to increase value (budget 20-30% of purchase price). (3) Rent to generate cash flow (target 1% rule: monthly rent = 1% of total investment). (4) Refinance based on new appraised value (cash-out refinance at 75% LTV). (5) Repeat with recycled capital.

Example: Buy $100k distressed property, invest $30k rehab, ARV $180k.

Refinance at 75% LTV = $135k loan.

Recover: $135k - $100k original mortgage = $35k (more than $30k rehab cost).

Result: Own cash-flowing property with little to no money left in deal.

Key requirement: Property must appraise high enough post-rehab to recover invested capital through refinancing.

BRRRR returns breakdown: Cash-on-cash return: 15-30% annually if executed well (infinite ROI possible if all capital recovered).

Equity capture: 20-40% of ARV (buy at 70% of ARV, rehab adds value).

Example calculation: Purchase $120k property, $30k rehab, ARV $200k.

Total invested: $120k + $30k = $150k.

Refinance at 75% ARV: $200k × 0.75 = $150k loan.

Capital recovered: $150k refinance - $120k original loan = $30k (100% of rehab costs back).

Equity position: $200k value - $150k loan = $50k equity (33% ROI on $150k invested).

Monthly cash flow: $1,800 rent - $1,100 mortgage - $300 expenses = $400/month ($4,800/year).

Cash-on-cash: If $0 left in deal (infinite ROI), if $10k left in = $4,800/$10k = 48% return.

Risk factors affecting returns: Rehab cost overruns (budget +20% contingency), appraisal comes in low (get pre-appraisal), interest rate increases (lock rate early), vacancy/repair costs (reserve 10% of rent).