What is the BRRRR Strategy?
If you’ve spent any time around real estate investors, you’ve probably heard the term BRRRR — short for Buy, Rehab, Rent, Refinance, Repeat. This popular investing method allows you to build a rental portfolio using the same pool of capital over and over again.
But here’s the secret most beginners miss: hard money loans can make the BRRRR strategy possible even if you don’t have all the cash upfront.
Step 1: Buy – Using Hard Money to Acquire the Deal
The first “B” — Buy — is all about purchasing a distressed property below market value.
Most investors use a hard money loan to fund this purchase because it’s faster and more flexible than a traditional bank loan. Hard money lenders typically finance up to 75% of the ARV (After Repair Value), which means you can often get 100% of the purchase and rehab costs covered if you buy smart.
Example:
You find a fixer-upper worth $300,000 after repairs (ARV). The purchase price is $180,000, and the rehab will cost $45,000.
- Hard money lender funds $225,000 (75% of ARV)
- You bring minimal cash to close
- You now control a property with strong equity potential
Pro Tip: Choose a lender who understands the BRRRR strategy — not just fix-and-flip loans. Timing and structure matter.
Step 2: Rehab – Forcing Appreciation
The rehab is where the value is created. Your goal is to “force” appreciation by improving the property to meet market standards.
Hard money loans are designed for short-term projects like this — typically 6 to 12 months, giving you time to renovate and stabilize the property.
Focus your rehab dollars on improvements that boost appraised value and rental income:
- Kitchen and bathroom updates
- Flooring and paint
- Roof, HVAC, or system upgrades
- Curb appeal improvements
Illustration:
If your $180,000 property appraises for $300,000 after a $45,000 rehab, you’ve created $75,000 in equity before even renting it out.
Step 3: Rent – Creating Cash Flow
Once the rehab is complete, it’s time to rent out the property.
Having tenants in place is crucial before refinancing because lenders want to see rental income stability. The higher the rent relative to your expenses, the stronger your refinance position.
Let’s say your newly rehabbed property rents for $2,400 per month and your future mortgage payment after refinancing will be $1,600. That’s $800 in monthly cash flow, plus you still own a property with significant equity.
Pro Tip: Screen tenants carefully and use a professional lease agreement to protect your investment.
Step 4: Refinance – Unlocking Your Equity
This is where the magic of the BRRRR strategy happens. Once the property is rented and producing income, you can refinance into a long-term loan, often a DSCR (Debt Service Coverage Ratio) loan or a conventional mortgage.
During this step, the new lender will pay off your hard money loan based on the new appraised value.
Example:
- New appraised value: $300,000
- Refinance loan (75% LTV): $225,000
- You pay off your hard money loan and recoup most or all of your cash investment
Now you own a stabilized rental property with long-term financing — and most importantly, you’ve got your money back to do it again.
Step 5: Repeat – Scaling Your Portfolio
Once you’ve completed one BRRRR, it’s time to repeat the process.
Using the same capital, you can acquire multiple properties over time, compounding your wealth and cash flow.
Illustration:
Start with one $225,000 project. After the refinance, you recover $40,000–$50,000 in equity and use that to fund the next deal. Over a few years, you can build a portfolio of 5–10 rentals, all producing income — using the same pool of money you started with.
Why Hard Money Is Perfect for BRRRR Investors
Traditional lenders rarely move fast enough for undervalued deals or distressed properties. Hard money lenders, on the other hand, are designed for speed, flexibility, and creative funding.
Benefits of using hard money for BRRRR:
- Quick closings
- Funding for rehab costs
- No income verification or tax return requirements
- Flexible terms tailored to investors
When you partner with a hard money lender who understands your goals, the BRRRR strategy becomes a repeatable system — not a one-time win.
Final Thoughts
The BRRRR Strategy with Hard Money is one of the most powerful ways to build long-term wealth through real estate. By combining short-term, flexible funding with smart refinancing, investors can scale their portfolios faster, maximize returns, and reinvest capital efficiently.
Whether you’re a first-time investor or looking to grow your existing portfolio, hard money loans can make your BRRRR strategy a reality.
Ready to start your first BRRRR project?
Get in touch with Preferred Capital Investors today — we specialize in funding fix-and-flip, DSCR, and BRRRR projects nationwide.
👉 Visit www.preferredcapitalinvestors.com to learn more.