With the fix-and-flip market proving to be less lucrative in recent years, real estate investors are beginning to fancy the “BRRRR” strategy: buy, rehab, rent, refinance and repeat.
“Home flipping activity and profitability continued to decline in Q3 2025 with typical return on investment dropping to 23.1%, the lowest since 2008,” said Rob Barber, CEO of ATTOM, a provider of real estate data, in the company’s Q3 2025 U.S. Home Flipping Report (1).
Must Read
“Rising home prices and shrinking margins have made flipping increasingly challenging,” he added. “What was once a flipping market that consistently delivered 40% to 60% returns for more than a decade beginning in 2009 has now settled into five straight quarters of returns in the 20% range.”
As of Q3 2025, 72,217 single-family homes and condominiums were flipped, accounting for 6.8% of total U.S. home sales for the quarter, according to ATTOM. That’s a decline from the 75,977 single-family homes and condominiums that were flipped in Q3 2024.
Barber said investors need to choose their markets carefully, stating that “the game has fundamentally changed.”
Headwinds in the fix-and-flip real estate market
“Sentiment remains muted, as economic uncertainty, elevated mortgage rates and rising resale inventory weigh on demand for flipped homes,” according to a survey from John Burns Research and Consulting, as well as Kiavi — a lender specializing in real estate investors — as reported by CNBC Property Play (2).
According to the survey, challenges facing flippers include higher interest rates and reduced labor availability for renovation work due to immigration enforcement. Home sales in general have also fallen to a 30-year low, which means it’s taking flippers longer to sell their properties (3).
“I think what our customers are really experiencing, it really comes down to housing velocity and turnover timelines,” Arvind Mohan, CEO of Kiavi, told CNBC Property Play. “They are definitely in the velocity business, and so if it takes them an extra month to complete a transaction, that’s capital that’s tied up in that property that can’t necessarily be freed up for the next investment.”
To adapt to this environment, some investors are moving from a fix-and-flip model to the BRRRR strategy. This involves buying an undervalued property, renovating it to increase its value, finding tenants to generate rental income and refinancing the property to recover the investment and cash out. That money can then be used to start the same process with another property (4).
Read More: This $1B private real estate fund is now accessible to non-millionaires. Here’s how you can get started with as little as $10
How the BRRRR approach works
While the BRRRR strategy may look simple enough on paper, buying an undervalued home requires strong knowledge of the local market. Furthermore, the purchase is often financed with a fix-and-flip loan, which can take various forms but is typically a short-term, high-interest loan (5).
One variation of that is a hard money loan, which is usually offered by non-traditional lenders. These loans are based primarily on the value of the property being used as collateral, rather than the borrower’s creditworthiness, and can typically be approved relatively quickly (6).
Investors typically evaluate the after-repair value of the target property and set their maximum offer at about 70% of that value to account for rehab costs, while leaving enough equity to qualify for refinancing (7).
Once purchased, the buyer makes improvements to increase the property’s curb appeal, which should in turn increase the property’s value ahead of refinancing, and allow for charging higher rents. The buyer then rents the property, which provides cash flow.
Once the property is rented, the investors then do a cash-out refinancing. This is a form of refinancing where the borrower secures a larger mortgage than their existing one and takes the difference out in cash (8).
Lenders often will require that the borrower has owned the property for at least six months and has cash reserves, a 25% equity, a credit score of at least 620, proof of income and a maximum debt-to-income ratio of 50%, according to Forbes (7). The investors will then repeat the process using the cash they’ve taken out to finance the purchase of another property.
BRRRR can offer a more predictable exit than the fix-and-flip method because “you’re taking out the risk of the market,” Louisville real estate investor Kevin Hart told Business Insider (9). Instead of worrying about a flip sitting for months while you’re paying interest, “you know that at the end of the rehab you can get a tenant in there and you can immediately refinance with the bank.”
Still, it does come with risks. “From the get-go, you still have the risk of rehab and the risk of running correct costs to make sure that you can actually get a good appraisal,” said Hart. Aside from making the numbers work, the strategy also depends on finding a suitable tenant.
That being said, it could also be more forgiving than a fix-and-flip. Potential investors should make sure they understand the local rental market, financing rules and their risk tolerance; for some, a traditional buy-and-hold or even staying on the sidelines may be the smarter move in 2026.
What To Read Next
Join 200,000+ readers and get Moneywise’s best stories and exclusive interviews first — clear insights curated and delivered weekly. Subscribe now.
Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
ATTOM (1); CNBC Property Play (2); Associated Press (3); Loan Guys (4); Forbes (5, 7); Investopedia (6, 8); Business Insider (9).
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.