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Remember the good old days when kids read books instead of scrolling, and “likes” and “feed” were usually reserved for your favorite pets? Oh, yes, and there was that quaint old technique that real estate investors used to make money: the BRRRR strategy.
Well, guess what? Just like the prehistoric shark in The Meg that is not in fact extinct, but alive and lurking in the deepest depths of the ocean, the BRRRR strategy—with a few modifications—has been living undercover in a few American outposts, biding its time for a comeback.
In the same way that the Ice Age killed the dinosaurs, the BRRRR strategy met its grim reaper when interest rates shot skyward, making the cherished “buy, rehab, rent, refinance, repeat” formula about as useful as a chocolate teapot.
However, in some U.S. towns and cities, where typical homes list for under $250,000 and local incomes support the values, BRRRRing, like being a blacksmith or churning butter by hand, can still be practiced by real estate artisans with an appreciation for the old way of doing things.
Why Sub-$250K Markets Still Matter
Realtor.com recently highlighted 10 metro areas where median listing prices remained under $250,000—roughly $175,000 under the national median. According to the website’s research team, these metros offer a “rare combination of affordability and stability,” meaning that a certain equilibrium exists between incomes and housing prices, which is a rarity in the current cash-strapped housing crisis.
The list of cities and their median listing prices is as follows:
Pottsville, Pennsylvania: $159,450
Elmira, New York: $179,900
Wheeling, West Virginia: $179,975
Wichita Falls, Texas: $199,900
Ottawa, Illinois: $199,925
St. Joseph, Missouri-Kansas: $227,125
Marinette, Wisconsin-Michigan: $227,425
Waterloo-Cedar Falls, Iowa: $242,450
Joplin, Missouri: $247,125
Watertown-Fort Drum, New York: $249,950
Earlier this year, Realtor.com compiled another list of sub-$250K markets suitable for first-time homeowners, which included three cities in Florida, and Harrisburg, Pennsylvania, a firm favorite in both lists.
Not surprisingly, these pockets of parity are not located in Sunbelt boomtowns or coastal enclaves but are scattered across the Midwest, Northeast, and Appalachia, in areas that have avoided speculative price surges over the last decade, making them stable and predictable and potentially fertile hunting ground for long-term rental investors.
“In these communities, buyers willing to look beyond major metros can still find attainable prices, reasonable competition, and a path to homeownership that remains feasible,” Hannah Jones, senior economic research analyst at Realtor.com, explains.
BRRRRing in a Higher-Interest Rate World
The needle has moved dramatically away from using the BRRRR strategy in today’s high interest rate environment. While high home prices have impeded investing elsewhere, they are not a major factor in the areas mentioned. However, those pesky interest rates are.
Out-of-the-box thinking, however, means BRRRRing might be tough but not impossible. Business Insider recently profiled two investors, Connor Swofford and Pieter Louw, from the Buffalo area who scaled to 24 units in two years using the BRRRR method.
“With a $300,000 or $400,000 property, with closing costs, you have to come up with 60 to 80 grand, which is not very scalable,” Louw, a Buffalo real estate agent, said.
Both recommend looking for multifamily deals that require minimal rehab and have at least one livable unit to generate rental income. They also suggest tighter underwriting and realistic timelines to bring in projects on budget, leaving room in the deal to repeat.
“Almost every property of ours has had a tenant still living in it, and that tenant is basically able to pay the interest expense as we are rehabbing the property,” explained Swofford. “So, we basically get to semi-rehab it for free in a way.”
When the price points are even lower, in the sub-$250K range, the numbers are more feasible, as long as strict underwriting protocols are maintained.
Potential BRRRR Case Studies From Current Listings
2044 Mahantongo St, Pottsville, PA
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Zillow listed 2044 Mahantongo St in Pottsville at about $200,000, with a noted previous sale around $138,000 in early 2024, indicating some value increase over a short period. It sold on Dec. 5 for $203,500.
In a market where the median list price is closer to $150,000, a $200,000 price tag suggests above?average size, condition, or location.
A lighter BRRRR/”slow BRRRR” sketch might assume:
Purchase: $195,000 contract after negotiating a modest discount
Rehab: $15,000–$20,000 for updates and tenant?ready improvements, rather than a complete renovation
All?in cost: About $210,000–$215,000
Rent: In a smaller Pennsylvania market like Pottsville, a well?kept three? or four?bedroom single?family might rent in the $1,500–$1,800 range, depending on features and location.
Refinance: If ARV lands modestly higher at $230,000, a 75% LTV loan would be about $172,500.
Here, the refinance would likely not be a full “money?out” event; rather, it could return part of the initial cash, convert to fixed, long?term debt, and leave a stabilized rental that still produces some margin after debt service and operating expenses.
418 E Norwegian St., Pottsville, PA
Homes.com advertises a nine?bedroom, two?bathroom property at 418 E Norwegian St in Pottsville for about $150,000, calling it a “blank canvas ready for transformation,” noting it was originally two homes combined. That signals a heavier value?add project rather than a turnkey rental.
A high?level BRRRR pro forma might look like this:
Purchase: Assume full price at $150,000 due to unique size and potential to re-split into multiple units.
Rehab: If an investor intends to reconfigure it back into two legal units with separate kitchens, updated baths, code?compliant egress, and system upgrades, a working rehab allowance might easily reach $120,000–$150,000 or more, depending on condition.
All?in cost: Roughly $270,000–$300,000
Rent: If repositioned as two four?or five?bedroom units, and assuming each could rent in a similar market at perhaps $1,300–$1,600, gross monthly rent could land in the $2,600–$3,200 range.
Refinance: If the after?repair value appraises at, say, $330,000 based on income and comparable duplexes, 75% LTV would be about $247,500.
In that case, the refinance could potentially return a large share of initial capital if the project stays near the lower rehab estimate and the appraisal supports the new income. The risk, of course, is that construction overruns or zoning and licensing hurdles push total costs up without a corresponding increase in ARV.
The Cash Flow Conundrum
If you live in these markets, many of you will no doubt run a cash flow analysis and realize that both these projects, at current interest rates, are either negative in cash flow or, at best, break even. So, why go through the hassle and expense of buying these deals in the first place?
Here’s the reality check: It’s not 2021—and if you wish to perform a BRRRR seance and communicate with an old-school technique from beyond the grave, you will have to get creative with your rental plans to boost cash flow. Common ways to turbocharge revenue include:
Renting by the room
Mid-term rentals
Targeted ROIs to add bedrooms or convert attics or basements
Charging for parking/washer and dryer, and pet fees
Final Thoughts
If you have the liquidity to ride out the current interest rate cycle, it makes sense to buy now and be meticulous in your budgeting while exploring ways to increase income. Waiting until rates drop in a meaningful way will see you lost in the buying stampede, rather than coolly moonwalking your way to a mortgage that makes sense.
Much of the scenario for resurrecting an old scaling standby depends on your cash reserves and ability to get comfortable being uncomfortable in the current climate. You’ll realize short-term tax benefits and long-term appreciation, but it’s an all-hands-on-deck approach to investing. No one said it was easy.
