How to Use the BRRRR Strategy for Multifamily Properties

Posted on February 28th, 2025 

Real estate investors looking to build long-term wealth often turn to the BRRRR strategy to maximize their capital. This method—Buy, Rehab, Rent, Refinance, Repeat—allows investors to recycle their money into multiple properties while creating cash flow and long-term appreciation.

When applied to multifamily properties, the BRRRR strategy becomes even more powerful. With multiple rental units in a single building, investors reduce risk, increase cash flow, and scale faster than with single-family homes. However, executing this strategy successfully requires careful planning and execution.

Let’s break down each step of the BRRRR method and discuss how to optimize it for multifamily properties.

What Is the BRRRR Strategy?

The BRRRR method is a real estate investment strategy that focuses on:

1. Buying undervalued properties.
2. Rehabbing them to increase value and rental income.
3. Renting the units to stable tenants.
4. Refinancing the property to recover the initial investment.
5. Repeating the process to grow the portfolio.

Unlike traditional investing, which often requires significant upfront capital, BRRRR allows investors to use the same money multiple times, leveraging each property’s appreciation.

For multifamily properties, this strategy offers unique advantages, including:

• Higher cash flow from multiple units.
• Risk mitigation since vacancies affect a smaller percentage of the total revenue.
• Better financing options, as lenders often favor properties with multiple income streams.

Let’s explore each step in detail.

Step 1: Buy – Identifying the Right Multifamily Property

Success with BRRRR starts with finding the right deal. The goal is to buy a distressed or undervalued multifamily property at a price that leaves room for renovations and refinancing.

Key Considerations When Buying:

• Location: Target areas with strong rental demand, job growth, and economic stability. Look for cities experiencing population increases or infrastructure developments.
• Property Condition: Focus on buildings needing cosmetic or moderate renovations rather than full gut rehabs to control costs.
• Purchase Price: Use the 70% Rule—do not exceed 70% of the property’s after-repair value (ARV) when adding the purchase price and rehab costs.
• Market Research: Analyze vacancy rates, rental prices, and potential appreciation before making an offer.

Where to Find Multifamily Deals:

• Off-Market Listings: Work with real estate wholesalers or direct mail campaigns.
• Foreclosures & Auctions: Properties in financial distress often sell below market value.
• MLS & Brokers: Some good deals can be found through local real estate agents specializing in multifamily properties.

Finding a great deal is the foundation of the BRRRR strategy, so patience and thorough due diligence are essential.

Step 2: Rehab – Adding Value Without Overcapitalizing

Once a multifamily property is purchased, the next step is renovating it to increase value and rental appeal. The goal is to maximize returns while keeping rehab costs controlled.

Cost-Effective Renovation Strategies:

• Curb Appeal: Fresh paint, landscaping, and new signage create a great first impression.
• Unit Upgrades: Install modern flooring, upgraded appliances, and fresh fixtures to attract quality tenants.
• Energy Efficiency: Low-flow toilets, LED lighting, and smart thermostats reduce expenses and appeal to eco-conscious renters.
• Common Areas & Amenities: Enhance hallways, parking areas, and laundry rooms to justify premium rents.
• Structural & Safety Improvements: Address plumbing, roofing, or electrical issues before cosmetic upgrades.

Managing Renovation Costs:

• Get multiple bids from contractors.
• Use a detailed scope of work to avoid hidden expenses.
• Set aside a contingency fund (10-15% of the budget) for unexpected issues.

Rehabbing the right way ensures a significant increase in both property value and rental potential.

Step 3: Rent – Stabilizing the Property for Maximum Cash Flow

After the renovation, securing high-quality tenants is critical to generating income and preparing for refinancing.

Best Practices for Leasing Multifamily Units:

• Tenant Screening: Conduct thorough background checks, including income verification, credit history, and rental references.
• Competitive Rent Pricing: Compare similar properties in the area to set optimal rent levels without overpricing.
• Strong Lease Agreements: Define clear policies on rent payments, maintenance, and tenant responsibilities.
• Online Property Management: Use digital tools for rent collection and maintenance requests to simplify operations.

The goal is to have full occupancy with stable tenants, which directly impacts refinancing potential.

Step 4: Refinance – Extracting Equity to Repeat the Process

Refinancing is the key to recycling capital and scaling investments. Once the property is stabilized, an investor can use a cash-out refinance to recover the initial investment.

Refinancing Considerations:

• Seasoning Period: Many lenders require 6-12 months of ownership before refinancing.
• Appraisal Value: Ensure the property is well-documented with before-and-after photos to support higher valuations.
• Debt-Service Coverage Ratio (DSCR): Lenders evaluate whether rental income sufficiently covers mortgage payments.

The ideal refinance extracts enough capital to fund the next BRRRR deal, continuing the cycle without additional out-of-pocket expenses.

Step 5: Repeat – Scaling a Multifamily Portfolio

Once capital is recovered, the process begins again with the next investment property.

Tips for Long-Term Success:

• Develop a Reliable Team: Build relationships with contractors, lenders, and property managers to streamline operations.
• Track Performance Metrics: Monitor cash flow, occupancy rates, and refinancing success to refine strategies.
• Leverage Creative Financing: Explore partnerships, syndications, or seller financing to expand faster.
• Diversify Markets: Consider investing in multiple locations to mitigate regional risks.

By repeating the BRRRR cycle, investors can quickly scale portfolios and generate passive income streams.

Common Challenges and How to Overcome Them

1. Underestimating Rehab Costs

• Solution: Get multiple bids and create a detailed budget.

2. Difficulty Filling Vacancies

• Solution: Use online marketing, offer move-in incentives, and improve tenant screening.

3. Low Appraisal Values

• Solution: Provide thorough documentation of upgrades and increased rental income.

4. Delays in Refinancing

• Solution: Build relationships with multiple lenders and explore alternative financing.

Successfully overcoming these challenges ensures a smoother BRRRR process and higher returns.

Why Multifamily BRRRR Investing Is a Game-Changer

Compared to single-family homes, multifamily properties offer:

✔ Higher rental income per investment
✔ Lower risk due to multiple tenants
✔ Easier scalability
✔ Stronger financing opportunities

For investors looking to build long-term wealth, BRRRR with multifamily properties is one of the most effective strategies available.

Final Thoughts – Get Started With BRRRR Today

Mastering the BRRRR strategy allows investors to leverage capital, scale portfolios, and generate passive income. By carefully following each step—Buying undervalued properties, Rehabbing efficiently, Renting strategically, Refinancing wisely, and Repeating the process—it is possible to achieve financial freedom through real estate.

Want expert guidance?

Amorim Capital Partners specializes in helping investors execute BRRRR deals successfully.

Call us at (904) 446-8443 or email us at [email protected]. Let’s build wealth together!