BRRRR Strategy: How We Got PAID $7,500 to Buy a Rental Property (2025 Deal Breakdown)
Preston Seo
We got paid $7,500 to buy a rental property that generates $500 per month in cash flow. That's not a typo. Using the BRRRR strategy, we walked away from the closing table with more money than we started with while adding a cash-flowing rental to our portfolio.
This guide breaks down exactly how we did it, including the complete deal numbers, how to find these opportunities, and how you can replicate this strategy even if you don't have money for a down payment.
If you're new here, welcome to the Legacy Investing Show where we discuss all things related to real estate investing, personal finance, and entrepreneurship. We hold a portfolio of 50+ rental units, do flips, wholesales, and own an assisted living facility.
In this article:
- What is the BRRRR Strategy?
- Real Deal Breakdown: $7,500 Profit
- The Money Flow Explained
- How to Find BRRRR Deals
- Hard Money Lending Explained
- Property Management Tips
- Key Takeaways
- FAQs
What is the BRRRR Strategy?
BRRRR stands for Buy, Renovate, Rent, Refinance, Repeat. It's a powerful real estate investment strategy that allows you to recycle your capital and build a rental property portfolio faster than traditional buy-and-hold investing.
The BRRRR Method Step by Step
| Step | Action | Purpose |
|---|---|---|
| Buy | Purchase undervalued property | Acquire below market value for built-in equity |
| Renovate | Rehab to increase value | Force appreciation through improvements |
| Rent | Place quality tenants | Generate cash flow and stabilize property |
| Refinance | Cash-out refinance at new value | Pull out invested capital (or more) |
| Repeat | Use capital for next property | Scale your portfolio without new money |
Why BRRRR Works
The magic of BRRRR is forced appreciation. Unlike waiting for the market to increase property values (market appreciation), you're actively creating value through strategic renovations.
When you buy a property for $125,000 that's worth $225,000 after repairs, you've created $100,000 in equity. By refinancing at 80% of that new value, you can pull out more money than you invested while keeping the property.
"The BRRRR strategy allows you to essentially get paid to build a rental portfolio. When executed correctly, you can walk away from closing with money in your pocket and a cash-flowing asset."
Real Deal Breakdown: How We Got Paid $7,500 to Buy a Rental
Let's walk through a real BRRRR deal from our portfolio with exact numbers so you can see how this works in practice.
The Property Details
| Category | Amount | Notes |
|---|---|---|
| Purchase Price | $125,000 | Paid $10K over asking to beat competition |
| Rehab Budget | $30,000 | Complete renovation |
| Holding Costs | $7,500 | Loan interest, utilities, insurance during rehab |
| Closing Costs | ~$10,000 | Both purchase and refinance |
| Total Investment | $172,500 | All-in cost before refinancing |
After Repair Value (ARV)
| Metric | Value |
|---|---|
| ARV | $225,000 |
| Equity Created | $52,500 |
| Equity Percentage | 23.3% |
The Refinance
| Refinance Details | Amount |
|---|---|
| New Appraised Value | $225,000 |
| Loan-to-Value (LTV) | 80% |
| New Loan Amount | $180,000 |
| Total Investment | $172,500 |
| Cash Back at Closing | $7,500 |
Monthly Cash Flow
| Income/Expense | Amount |
|---|---|
| Monthly Rent | $1,800 |
| Mortgage Payment | ~$1,100 |
| Property Management (10%) | $180 |
| Reserves/Maintenance | $120 |
| Net Monthly Cash Flow | ~$500 |
Deal Summary
We invested $0 of our own money (100% hard money financing), got paid $7,500 at the refinance closing, and now own a property generating $500/month in passive income.
Annual return on $0 invested = Infinite ROI
The Money Flow: Purchase to Refinance to Profit
Understanding the flow of money in a BRRRR deal is crucial. Here's how capital moves through each phase of this strategy.
Phase 1: Purchase
Hard Money Loan: $125,000 (100% of purchase)
↓
Purchase Property: $125,000
↓
Immediate Equity: $100,000 (ARV $225K - Purchase $125K)
Why we paid $10K over asking: Competition for good deals is fierce. We found this property through a wholesaler, and multiple investors were making offers. Paying slightly above asking (but well below ARV) secured the deal and still left plenty of margin for profit.
Phase 2: Renovation
Rehab Financing: $30,000 (from hard money loan)
↓
Complete Renovations: Kitchens, Bathrooms, Flooring, Paint
↓
Holding Costs: $7,500 (paid from reserves or loan)
↓
Property Value: $125,000 → $225,000
Renovation focus areas:
- Kitchen updates (biggest ROI)
- Bathroom modernization
- New flooring throughout
- Fresh paint interior and exterior
- Curb appeal improvements
Phase 3: Rent
List Property: Market rent analysis
↓
Tenant Placement: Screen, verify income, check references
↓
Lease Signed: $1,800/month
↓
Property Stabilized: Ready for refinance
Key milestone: Most lenders require 30-60 days of rental history before refinancing. Having a signed lease with paying tenants proves the property's income potential.
Phase 4: Refinance
Property Appraisal: $225,000 ARV confirmed
↓
New Conventional Loan: 80% LTV = $180,000
↓
Pay Off Hard Money: $155,000 (purchase + rehab)
↓
Pay Closing Costs: ~$10,000
↓
Cash to You: $7,500 PROFIT
Phase 5: Repeat
Cash Available: $7,500 + monthly cash flow
↓
Find Next Deal: Use same process
↓
Scale Portfolio: No new capital needed
How to Find BRRRR Deals
Finding the right deal is 80% of BRRRR success. You need properties significantly below market value with renovation potential. Here are the best sources.
Source 1: Wholesalers (Our Primary Method)
What wholesalers do: Wholesalers find distressed or motivated sellers, negotiate contracts below market value, and assign those contracts to investors like you for a fee.
Why they're valuable for BRRRR:
- Properties are already negotiated below market
- Deals come pre-analyzed with repair estimates
- Saves you time on marketing and negotiation
- Wholesalers understand investor needs
How to connect with wholesalers:
- Attend local real estate investing meetups
- Join Facebook groups for your market
- Ask other investors for referrals
- Let wholesalers know exactly what you're looking for
- Respond quickly when they send deals (good ones go fast)
"Network with people who are consistently bringing deals and prove that you're someone who can close on the deal."
Source 2: Investor-Friendly Real Estate Agents
Not all agents understand investment properties. Look for agents who:
- Own investment properties themselves
- Understand cash-on-cash return and cap rates
- Can analyze deals from an investor perspective
- Have access to off-market opportunities
- Work with other investors in your market
Questions to ask potential agents:
- Do you own rental properties?
- How many investor clients do you work with?
- Can you help me analyze deals for BRRRR potential?
- Do you have access to off-market properties?
Source 3: Direct Marketing
For those wanting complete control over deal flow:
- Direct mail to distressed property owners
- Driving for dollars (identifying vacant/distressed properties)
- Online marketing (PPC, SEO, social media)
- Cold calling and SMS campaigns
- Bandit signs (where legal)
Direct marketing requires:
- Upfront capital for marketing spend
- Time to manage campaigns
- Systems to handle leads
- Negotiation skills with sellers
What Makes a Good BRRRR Deal?
| Criteria | Target | Why It Matters |
|---|---|---|
| Purchase Price | 65-75% of ARV | Leaves room for rehab and profit |
| Rehab Budget | 15-25% of ARV | Enough to force appreciation |
| Total Investment | 75-80% of ARV | Ensures cash back at refinance |
| Monthly Cash Flow | $300-500+ | Property must be profitable |
| ARV Confidence | High | Verify with comps before purchasing |
Hard Money Lending: How to Get 100% Financing
Hard money loans made our BRRRR deal possible with zero out-of-pocket cost. Understanding how these loans work is essential for maximizing the strategy.
What is Hard Money?
Hard money loans are short-term financing from private lenders (not banks) based primarily on the property's value rather than your personal creditworthiness.
| Feature | Hard Money | Conventional |
|---|---|---|
| Approval Based On | Property value/deal quality | Credit score/income |
| Funding Speed | 1-2 weeks | 30-45 days |
| Term Length | 6-24 months | 15-30 years |
| Interest Rate | 10-14% | 6-8% |
| Points/Fees | 2-4 points | 0-2 points |
| LTV Offered | Up to 100% of purchase | 80-97% of purchase |
How 100% Financing Works
Hard money lenders will fund 100% of your purchase and rehab when:
- The deal is strong: Total investment is 70-75% or less of ARV
- You have experience: Track record of successful projects helps
- The property secures the loan: Lender can recover money if you default
- Numbers are verified: ARV and rehab estimates are accurate
In our deal:
- ARV: $225,000
- Total needed: $155,000 (purchase + rehab)
- Percentage of ARV: 69%
- Lender confidence: High (plenty of margin for error)
Finding Hard Money Lenders
Local private lenders:
- Attend real estate meetups and networking events
- Ask other investors who they use
- Search "hard money lender [your city]"
- Build relationships before you need funding
National hard money companies:
- Lima One Capital
- Kiavi (formerly LendingHome)
- RCN Capital
- Visio Lending
- CoreVest
Hard Money Loan Costs
For a typical 6-month BRRRR project:
| Cost | Amount | When Paid |
|---|---|---|
| Origination Points | 2-4% of loan | At closing |
| Monthly Interest | ~1% of loan | Monthly |
| Appraisal Fee | $400-600 | At application |
| Closing Costs | 1-2% of loan | At closing |
Example on $155,000 loan:
- Points (3%): $4,650
- Interest (6 months at 1%): $9,300
- Appraisal: $500
- Closing: $2,000
- Total cost: ~$16,450
These costs are built into your total investment number. The refinance pays off the hard money loan plus all these costs.
Property Management: The Key to Passive Income
Choosing the right property management company can make or break your BRRRR investment. Here's how to vet and work with property managers effectively.
Why Property Management Matters
After the refinance, your BRRRR property becomes a long-term hold. Bad property management leads to:
- Higher vacancy rates
- More tenant turnover
- Deferred maintenance becoming expensive repairs
- Lower rent collection rates
- Stress and headaches for you
How to Vet Property Management Companies
Step 1: Research and Reviews
- Check Google reviews and BBB ratings
- Ask for references from current clients
- Talk to other investors about their experiences
- Look for red flags: high turnover, unresponsive, hidden fees
Step 2: Understand Their Process
| Area | Questions to Ask |
|---|---|
| Tenant Screening | What are your income, credit, and background requirements? |
| Rent Collection | How do you handle late payments? What's your eviction process? |
| Maintenance | Do you have in-house maintenance? What's your response time? |
| Communication | How often will I receive reports? How can I reach you? |
| Fees | What's your management fee? Are there hidden costs? |
Step 3: Verify Their Numbers
Ask for:
- Average days on market for their properties
- Average tenant turnover rate
- Rent collection rate
- Maintenance cost per unit
- Sample monthly statements
Typical Property Management Fees
| Service | Cost |
|---|---|
| Monthly Management | 8-10% of collected rent |
| Tenant Placement | 50-100% of first month's rent |
| Lease Renewal | $100-300 or percentage |
| Maintenance Markup | 10-20% on repairs |
| Eviction Management | $200-500 plus legal costs |
Self-Management vs. Hiring a PM
Consider self-managing if:
- Property is close to where you live
- You have time to handle tenant calls
- You want to learn the business hands-on
- Maximizing cash flow is the priority
- You enjoy property management
Hire a PM if:
- Property is out of state
- You value passive income over maximum returns
- You're scaling to multiple properties
- You have a demanding W-2 job
- You don't want landlord responsibilities
"Really vet property management companies before you hand over your investment. Talk to their current clients, check reviews, and understand exactly what you're paying for."
Advanced BRRRR Strategy: Buying the Whole Street
Once you've mastered basic BRRRR, consider this advanced strategy we're implementing.
The Concept
Instead of buying one property at a time, strategically acquire multiple properties on the same street or block. This creates:
- Economy of scale: One property manager, one maintenance crew, easier oversight
- Neighborhood control: You influence the quality of the entire block
- Future development potential: Assemblage for larger projects
- Reduced competition: Fewer investors targeting your area
How We're Doing It
In one of our markets, we've been systematically acquiring properties on the same street:
- Started with one BRRRR property
- Built relationships with neighbors
- Made offers when properties become available
- Long-term goal: own enough for development potential
Why This Matters for Long-Term Wealth
Individual rental properties generate cash flow. But when you control an entire block or significant portion of a street:
- Land value often exceeds individual property values
- Development potential increases dramatically
- Exit strategies multiply (sell individually, sell as package, develop)
- Generational wealth potential increases
Key Takeaways: Your BRRRR Action Plan
BRRRR Deal Checklist
Before Purchase:
- Property at 65-75% of ARV
- Rehab budget verified by contractor
- ARV supported by recent comps
- Total investment at 75-80% of ARV or less
- Exit strategy clear (refinance terms known)
During Renovation:
- Scope of work documented
- Timeline established with contractor
- Holding costs budgeted
- Regular progress inspections scheduled
Tenant Placement:
- Market rent analysis completed
- Tenant screening criteria set
- Property manager selected (if using)
- Lease terms finalized
Refinance:
- Lender requirements understood
- Seasoning period completed
- Appraisal scheduled
- Cash-out amount calculated
Our BRRRR Deal Summary
| Metric | Amount |
|---|---|
| Purchase Price | $125,000 |
| Rehab Cost | $30,000 |
| Holding Costs | $7,500 |
| Closing Costs | $10,000 |
| Total Investment | $172,500 |
| ARV | $225,000 |
| New Loan (80% LTV) | $180,000 |
| Cash Back | $7,500 |
| Monthly Cash Flow | $500 |
| Money Out of Pocket | $0 |
Watch the Full BRRRR Tutorial
Video highlights:
- 0:00 - Introduction to BRRRR strategy
- 2:30 - Complete deal breakdown with numbers
- 6:45 - How to find deals through wholesalers
- 9:15 - Hard money lending explained
- 11:30 - Property management tips
- 13:00 - Advanced strategy: buying the whole street
Frequently Asked Questions
What is the BRRRR strategy and how does it work?
BRRRR stands for Buy, Renovate, Rent, Refinance, Repeat. You purchase an undervalued property (often with hard money), renovate to increase its value, place tenants to generate income, refinance to pull out your capital, and repeat with the recycled money. Done correctly, you can get 100% or more of your investment back while keeping cash-flowing rental properties.
Can you really get paid to buy rental properties?
Yes, when your After Repair Value (ARV) exceeds your total investment and you refinance at 80% LTV. In our example, we invested $172,500 total and refinanced at $180,000, resulting in $7,500 cash back at closing while keeping a property generating $500/month cash flow.
How much money do I need to start the BRRRR strategy?
With strong enough deals, you can start with very little. Hard money lenders will fund 100% of purchase and renovation when total investment is 70-75% of ARV or less. You may need some reserves for holding costs, but the strategy is designed to recycle capital rather than require large amounts upfront.
What's the biggest risk with BRRRR investing?
The biggest risks are renovation costs exceeding budget, ARV coming in lower than expected, or difficulty finding tenants at projected rent. Always build 10-15% contingency into your rehab budget, verify ARV with multiple comparable sales, and understand rental demand in your market before purchasing.
How do I find properties for BRRRR deals?
The best sources are wholesalers (who find and negotiate distressed properties), investor-friendly real estate agents, and direct marketing to property owners. Building relationships with wholesalers is particularly valuable because they bring pre-negotiated deals below market value.
Start Your BRRRR Journey
Ready to get paid to build your rental property portfolio?
The BRRRR strategy is one of the most powerful wealth-building tools in real estate. It allows you to:
- Build a portfolio without large amounts of capital
- Create forced appreciation through strategic renovations
- Generate passive income from rental properties
- Recycle your money into more deals
The key is finding the right deals and executing the renovation and refinance correctly. Start networking with wholesalers, learn your market's ARV and rent numbers, and build relationships with hard money lenders.
Learn more about building wealth through real estate investing →
About Legacy Investing Show
Legacy Investing Show is Preston Seo's comprehensive real estate investing education platform. Since founding, the program has:
- Trained 2,000+ students across the United States
- Generated $10M+ in cumulative student revenue
- Built an active community of real estate investors
- Helped students build portfolios of rental properties
Preston Seo built a portfolio of 50+ rental units using strategies like BRRRR, along with flips, wholesales, and an assisted living facility. Legacy Investing Show teaches these exact systems so you can achieve financial freedom through real estate.
Learn more about the program → | Watch free training →
This deal breakdown is based on an actual BRRRR transaction from our portfolio. All numbers are from the real deal. Individual results vary based on market conditions, deal quality, and execution. Always verify ARV with recent comparable sales and get multiple contractor estimates before purchasing. Consult with qualified professionals (real estate attorneys, CPAs, lenders) for your specific situation.
Last updated: January 24, 2026
Frequently Asked Questions
BRRRR stands for Buy, Renovate, Rent, Refinance, Repeat. It's a real estate investment strategy where you purchase an undervalued property, renovate it to increase value, rent it out to tenants, refinance to pull out your invested capital (or more), and repeat the process with a new property. Done correctly, you can get paid to buy rental properties.
You get paid when your After Repair Value (ARV) exceeds your total investment. In our example: $172,500 total invested (purchase + rehab + holding + closing costs), ARV of $225,000, refinanced at 80% LTV ($180,000 new loan), resulting in $7,500 cash back at closing while keeping the cash-flowing property.
A hard money loan is short-term financing from private lenders based on the property's value rather than your credit. For BRRRR, hard money lenders can fund 100% of the purchase and renovation if the deal is strong enough. Interest rates are higher (typically 10-14%), but you can refinance into a conventional loan once the property is stabilized.
The best sources are wholesalers (who find distressed properties and assign contracts), investor-friendly real estate agents, and direct marketing. Building relationships with wholesalers is essential because they bring you pre-negotiated deals below market value that are perfect for BRRRR.
A successful BRRRR should generate $300-500+ monthly cash flow, return 100% of your invested capital at refinance (or more), and build equity through forced appreciation from renovations. Our example generated $500/month cash flow plus $7,500 cash back at closing.
Typically 4-6 months from purchase to refinance. The renovation phase takes 1-3 months depending on scope. You'll need the property rented for at least 30-60 days before most lenders will refinance. Some investors run multiple BRRRR projects simultaneously.
Main risks include: renovation costs exceeding budget, ARV coming in lower than expected, difficulty finding tenants at projected rent, hard money loan costs eating into returns if project takes too long, and refinance appraisal not meeting expectations. Always build contingency into your numbers.
Yes, if you find a deal good enough. Hard money lenders will fund 100% of purchase and rehab when the numbers are strong (typically when total investment is 70-75% of ARV or less). You may need to bring cash for holding costs and closing, or find lenders who roll these in.
House flipping involves buying, renovating, and selling for profit. BRRRR involves buying, renovating, and keeping as a rental. With BRRRR, you build long-term wealth through rental income and appreciation while recycling your capital. Flipping generates one-time profit but no ongoing income.
Check reviews and references from other investors, understand their fee structure (typically 8-10% of rent), ask about their tenant screening process, verify their maintenance protocols, and ensure they provide detailed monthly statements. Good property management is essential for passive income.