By now, you’ve likely heard of the BRRRR strategy:
Buy. Renovate. Rent. Refinance. Repeat.
On paper, it’s straightforward. You acquire a property, improve it, place a tenant, refinance into long-term debt, and recycle your capital into the next deal.
But while the framework is simple, small miscalculations can quickly turn a good deal into a bad one.
Here are four of the most common mistakes investors make when using the BRRRR strategy—and how to avoid them.
1. Inaccurate ARV (After Repair Value)
Your after-repair value (ARV) is the foundation of the entire deal.
If it’s wrong, everything downstream—purchase price, rehab budget, refinance outcome, and profit—falls apart.
ARV isn’t a guess. It should be a defensible number based on strong comparable sales, not optimistic assumptions.
How to avoid it:
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- Use recent, highly comparable sales (similar size, condition, and location)
- Be conservative—don’t base your numbers on best-case comps
- Cross-check your ARV using multiple data sources
A disciplined approach to ARV protects you from overpaying and underestimating risk.
2. Underestimating Rehab Costs
This is one of the fastest ways to kill a deal.
Small misses add up quickly—and once a project is underway, your flexibility disappears.
Underestimating rehab costs doesn’t just impact your budget. It affects your timeline, your refinance numbers, and ultimately your returns.
How to avoid it:
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- Build a detailed, line-item scope of work
- Get real quotes whenever possible
- Assign timelines and responsible parties to each phase
- Add a 10–15% contingency buffer for overruns
Unexpected costs aren’t the exception—they’re part of the process. Plan accordingly.
3. Poor Project Management
Even a great deal can go sideways without strong execution.
Delays—whether from contractors, materials, or financing—directly increase your holding costs. That means more interest, more utilities, more maintenance, and less profit.
Time is money in every phase of BRRRR.
How to avoid it:
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- Maintain consistent communication with contractors and lenders
- Set clear timelines and hold people accountable
- Stay actively involved from start to finish
- Address issues early before they compound
The longer a project drags on, the more it eats into your margins.
4. Inflated Rent Projections
Overestimating rent is just as dangerous as overestimating ARV.
On the refinance side of BRRRR, lenders evaluate your deal based heavily on cash flow—and rent is the key driver.
If your rent assumptions are too aggressive, you may fall short on loan terms or struggle to hit your expected returns.
How to avoid it:
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- Analyze true rental comps—not aspirational ones
- Focus on properties similar in size, condition, and location
- Base projections on post-rehab reality, not best-case scenarios
- Verify rents using multiple data sources
Accurate rent projections ensure your exit strategy actually works.
Final Thoughts
The BRRRR strategy is proven, repeatable, and powerful—but it’s not foolproof.
Success comes down to disciplined underwriting, realistic assumptions, and strong execution.
There’s no perfect strategy in real estate. But when done correctly, BRRRR can be one of the most effective ways to build and scale a rental portfolio.
The key is simple:
Be conservative on the front end so your results hold up on the back end.
Thanks for reading this week’s Experience, and best of luck in your real estate investing journey!
-BROCK