BRRRR Method Evolution in Real Estate

[Mohamed Youssef]

The classic Buy-Rehab-Rent-Refinance-Repeat strategy needs rethinking in our current financing environment. I've been tracking how successful investors are adapting their approach.

The traditional BRRRR relied on loan-to-value refinances of 75-80% after forcing appreciation through renovations. With today's higher rates and more conservative appraisals, the math often breaks.

Smart adaptations I'm seeing:

• Extending the holding period before refinancing (from 6 months to 12-18 months) to allow rent growth to catch up with investment
• Focusing on properties requiring less intensive rehab to minimize the gap between purchase and stabilized value
• Negotiating seller financing for the initial purchase with terms allowing early payoff without penalty
• Partnering with private capital for the initial purchase and rehab, then refinancing to return only a portion of their investment

One investor modified his approach by purchasing properties with in-place cash flow, even with deferred maintenance, rather than vacant properties needing complete renovations. This modification allowed him to immediately service debt while executing the value-add components gradually.

Has anyone found creative workarounds to the refinancing challenges?