I'm probably over-simplifying this, but I would think that the BRRRR method, when done correctly is not what you are suggesting. In fact, it could be argued that it is significantly less risky than the alternative of purchasing a property and leaving your capital in it. As Neil mentioned, when doing the BRRRR method properly, you are forcing appreciation, not relying on the market to create appreciation. You then are locking in long term financing and pulling out up to 70% (sometimes higher) of the appraised value. As inflation increases, this locked in rate, and locked in mortgage value becomes more valuable. Furthermore, your risk is defined by the amount of money you have in the deal. So if you are able to pull out a large portion of your capital, you are in essence, de-risking yourself. As Brandon always mentions, buying a property for 80k thats worth 100k with 0% down is the same as buying a 100K house with 20% down, but which situation allows you for larger mistakes? The one where you still have 20K for reserves or other purposes.
Of course COVID really scared a lot of investors. And many had to pivot when banks stopped lending for a few months there. I actually had to do just this. I was in the process of refinancing in March when appraisers were deemed non-essential in PA, and all the banks backed out of refinancing the property. But prior to buying the property, I ensured I had a large capital reserve, and that the property would cash flow even with the current hard money loan that I used to purchase, even if it was at 10% interest. I had to wait 3 months until I could start the process over again, but during that time, I made some more repairs, and called more and more lenders preparing for when we would be able to move forward again. Ended up finding a lender that does 80% cash out refi, which is 10% higher than any other bank I had been in contact with, so COVID will actually end up helping me pull out an additional 10% of my money to reinvest in other deals.
In regards to your rents decreasing beyond a point of cash flowing idea, that is definitely something to always consider. You never want to be the top of market rents when you are analyzing, so if a market correction occurs, you still should be able to get the rents you want. But I guess that comes with more experience and understanding that spreadsheet math should always be conservative to avoid any downturn effects.
Again, I am surely over-simplifying, and if you are not properly running numbers or doing things correctly, then just like all investments, the BRRRR method can be very risky. But for someone just getting started, who may only have 20-30k, this is the fastest and safest way to scale in my opinion.
