1. What is BRRRR?
BRRRR stands for Buy, Rehab, Rent, Refinance, Repeat. It is a real estate investment strategy that allows you to recycle your capital across multiple properties instead of having money locked up in a single deal.
Here is the basic idea: You buy a property below market value, renovate it to increase its worth, place a tenant to generate rental income, then do a cash-out refinance based on the new higher value. The refinance pulls out most (or all) of the money you put in, and you use that capital to do it again on the next property.
The end result is a growing portfolio of cash-flowing rental properties, each purchased with the same pool of capital. Done correctly, a BRRRR investor can acquire 3-5 properties per year using money that would otherwise buy a single property through traditional investing.
BRRRR vs. Traditional Buy-and-Hold
- Traditional: Buy a property for $350,000 with 25% down ($87,500). That $87,500 is now locked in one property. To buy another, you need another $87,500.
- BRRRR: Buy a distressed property for $280,000, spend $50,000 on rehab (total $330,000 invested). After renovation, it appraises at $420,000. Refinance at 75% LTV ($315,000), pulling out all but $15,000 of your original capital. Use the recovered funds to buy the next property.
2. Why Colorado is Great for BRRRR
Not every market works for BRRRR. You need the right combination of growth, rental demand, and available inventory. Colorado checks every box.
Population Growth
Colorado has been one of the fastest-growing states in the country for over a decade. The Front Range corridor from Fort Collins to Colorado Springs continues to attract residents from higher-cost markets like California, the Pacific Northwest, and the Northeast. More people means more demand for housing. Both ownership and rental.
Rental Demand
Colorado's rental market is tight. Vacancy rates across the Front Range consistently sit below 5%, and in many neighborhoods they are under 3%. The combination of high home prices (which keep many people renting) and steady job growth (which brings new tenants) creates a favorable environment for landlords.
| Market | Avg. 3BR Rent | Vacancy Rate | Year-over-Year Rent Growth |
|---|---|---|---|
| Denver Metro | $2,250 - $2,600 | 4.2% | 3.1% |
| Colorado Springs | $1,750 - $2,100 | 3.8% | 4.2% |
| Fort Collins | $2,000 - $2,400 | 3.5% | 3.6% |
| Aurora | $2,100 - $2,450 | 4.0% | 3.4% |
| Greeley / Weld County | $1,650 - $1,950 | 3.2% | 4.8% |
Appreciation History
Colorado home values have consistently appreciated above the national average. Even during periods of national stagnation, the Front Range market has shown resilience. For BRRRR investors, this matters because appreciation increases your equity position over time, making each refinance more powerful and each property more valuable.
Strong Job Market
Colorado's economy is diversified across technology, aerospace and defense, healthcare, energy, higher education, and tourism. Major employers include Lockheed Martin, Ball Aerospace, UCHealth, Amazon, Google, and multiple military installations. A diverse job market protects against sector-specific downturns and ensures consistent rental demand.
Investor-Friendly Environment
Colorado does not have rent control at the state level (though some municipalities have been discussing it). Property taxes are among the lowest in the nation (more on this below). And the strong population growth means there is a steady supply of renters who need housing.
3. Step-by-Step BRRRR in Colorado
Step 1: Buy Below Market Value
The entire BRRRR strategy hinges on buying right. You need to acquire a property at a significant discount to its after-repair value (ARV). This discount is what creates the equity that makes the refinance work.
Where to find below-market properties in Colorado:
- Off-market deals: Properties sourced directly from motivated sellers, before they hit the MLS. These often come through real estate investment companies (like EZ Investments), direct mail campaigns, or networking.
- On-market opportunities: Listings that have been sitting for 60+ days, price reductions, estate sales, and properties in poor condition that scare away traditional buyers.
- Motivated seller situations: Divorce, job relocation, inherited properties, tax delinquency, pre-foreclosure. These sellers are often willing to accept below-market offers for a fast, certain close.
- Auctions: Foreclosure auctions and tax lien sales. Higher risk, but potential for deep discounts.
Target Purchase Price
For BRRRR to work, your total investment (purchase price + rehab costs) should be no more than 70-75% of the ARV. This gives you enough equity to refinance out most or all of your capital.
Financing the purchase:
- Cash: Fastest close, strongest negotiating position. Required at auction.
- Hard money loans: Short-term loans (6-18 months) at higher interest rates (9-14%). Quick to close, based on property value rather than borrower income. Common for BRRRR investors.
- Private money: Loans from individuals (friends, family, private investors). Terms are negotiable. Often the best option for new investors with strong networks.
- Home equity line of credit (HELOC): If you own a primary residence with equity, a HELOC can fund the purchase. Low interest, flexible draw schedule.
Step 2: Rehab
The renovation phase is where you create value. Your goal is to bring the property up to a condition that maximizes its appraised value and attracts quality tenants. Without over-improving for the neighborhood.
Colorado Construction Costs
Colorado construction costs run 10-15% above the national average due to labor demand along the Front Range. Here are typical costs for common rehab items:
| Item | Typical Colorado Cost |
|---|---|
| Full kitchen remodel (mid-grade) | $18,000 - $28,000 |
| Full bathroom remodel | $6,000 - $12,000 |
| Flooring (LVP, full home) | $5 - $9 per sqft installed |
| Interior paint (full home) | $3,500 - $7,000 |
| HVAC replacement | $7,000 - $14,000 |
| Roof replacement | $8,000 - $16,000 |
| Electrical panel upgrade | $2,000 - $4,000 |
| Water heater (tank) | $1,200 - $2,500 |
| Radon mitigation system | $800 - $2,500 |
Timeline Expectations
- Cosmetic rehab (paint, flooring, fixtures): 2-4 weeks
- Medium rehab (kitchen, baths, mechanical updates): 6-10 weeks
- Heavy rehab (full gut, structural, layout changes): 3-6 months
Colorado permit requirements vary by municipality. Most jurisdictions require permits for structural changes, electrical work, plumbing modifications, and HVAC replacement. Cosmetic work generally does not require permits. Always check with the local building department. Unpermitted work can create serious problems at appraisal and resale.
Do Not Over-Improve
BRRRR properties are rentals, not flips. You are renovating for durability and tenant appeal, not for magazine-quality finishes. Use mid-grade materials that hold up to tenant wear. Granite countertops, LVP flooring, and solid cabinetry are the sweet spot. No need for custom tile work or high-end appliances.
Step 3: Rent
Once the rehab is complete, place a tenant as quickly as possible. Every month the property sits vacant costs you money. Especially if you are carrying a hard money loan.
Colorado Rental Market by City
Denver Metro: Average rents for a renovated 3-bedroom single-family home run $2,250 - $2,600 per month depending on neighborhood. South Denver and Lakewood tend to be on the higher end. Vacancy periods average 2-3 weeks for a well-priced, well-marketed property.
Colorado Springs: Average 3-bedroom rents are $1,750 - $2,100. The military population provides a reliable tenant pool with guaranteed income (BAH). The east side and Powers Corridor are particularly strong rental areas.
Fort Collins: Average 3-bedroom rents are $2,000 - $2,400. Strong demand from Colorado State University staff, students, and the growing tech sector. Properties near Old Town and the university command premium rents.
Greeley / Weld County: Average 3-bedroom rents are $1,650 - $1,950. Lower purchase prices make for better cash-on-cash returns. University of Northern Colorado and the energy sector drive demand.
Tenant Screening
Quality tenants are the difference between passive income and a nightmare. At minimum, screen for:
- Credit score (650+ preferred for single-family)
- Income verification (minimum 3x monthly rent)
- Rental history and landlord references (2 years minimum)
- Background and eviction check
- Employment verification
Step 4: Refinance
The refinance is the engine of BRRRR. This is where you pull your invested capital back out so you can deploy it on the next property.
How Cash-Out Refinance Works
- The property is appraised based on its current (post-rehab) condition
- The lender offers a loan at a percentage of the appraised value (typically 75% LTV for investment properties)
- The new loan pays off any existing debt (hard money loan, HELOC draw, etc.)
- The remaining proceeds go to you as cash
Refinance Example
You purchased a property for $280,000 and spent $50,000 on rehab.
Total capital invested: $330,000
After rehab, the property appraises at: $420,000
Cash-out refinance at 75% LTV: $420,000 × 0.75 = $315,000
After closing costs (~$5,000): $310,000 in your pocket
Capital left in the deal: $330,000 − $310,000 = $20,000
You recovered 94% of your capital and still own a cash-flowing rental property.
Seasoning Requirements
Most lenders require a "seasoning period" before they will do a cash-out refinance on an investment property. This is the minimum time you must own the property before refinancing.
- Conventional lenders: Typically 6 months from the date of purchase
- Portfolio lenders / credit unions: Sometimes as low as 3 months, or no seasoning requirement
- DSCR lenders: Many have no seasoning requirement. They base the loan on the property's income, not the borrower's financials
Plan your rehab timeline around seasoning requirements. If your lender requires 6 months, and your rehab takes 8 weeks, you will need to hold the property with a tenant for roughly 3 months before you can refinance.
Step 5: Repeat
Take the capital from the refinance and do it again. Each cycle builds your portfolio. Here is what the trajectory looks like:
| Year | Properties Acquired | Total Portfolio | Monthly Cash Flow (est.) |
|---|---|---|---|
| Year 1 | 2 | 2 | $400 - $600 |
| Year 2 | 3 | 5 | $1,200 - $1,800 |
| Year 3 | 3-4 | 8-9 | $2,400 - $3,600 |
| Year 5 | Varies | 12-15 | $4,000 - $6,000+ |
Each property also appreciates over time, builds equity through mortgage paydown, and provides tax benefits through depreciation. The compounding effect of rental income, appreciation, and equity growth is what makes BRRRR one of the most powerful wealth-building strategies in real estate.
4. BRRRR Calculator Example
Let us walk through a complete BRRRR deal with real Colorado numbers. This is a realistic scenario based on current Front Range market conditions.
Subject Property
3-bed / 2-bath ranch in Thornton, CO
1,350 sqft, built 1978, needs medium-to-heavy renovation
Purchased off-market from a motivated seller
Purchase
| Item | Amount |
|---|---|
| Purchase price | $310,000 |
| Closing costs (buy side) | $4,000 |
| Acquisition fee (off-market sourcing) | $12,000 |
| Total acquisition cost | $326,000 |
Rehab
| Item | Cost |
|---|---|
| Kitchen remodel (cabinets, counters, appliances) | $19,000 |
| Bathroom remodels (x2) | $11,000 |
| Flooring throughout (LVP) | $7,500 |
| Paint (interior + exterior) | $6,000 |
| HVAC (new furnace, add AC) | $9,500 |
| Electrical updates | $2,500 |
| Radon mitigation | $1,200 |
| Landscaping and curb appeal | $1,800 |
| Contingency (10%) | $5,850 |
| Total rehab cost | $64,350 |
Total Investment
| Category | Amount |
|---|---|
| Acquisition cost | $326,000 |
| Rehab cost | $64,350 |
| Holding costs during rehab (2 months: hard money interest, insurance, taxes, utilities) | $5,200 |
| Total capital invested | $395,550 |
After Repair Value and Refinance
| Item | Amount |
|---|---|
| After Repair Value (ARV) based on comps | $475,000 |
| Refinance at 75% LTV | $356,250 |
| Refinance closing costs | $5,500 |
| Net refinance proceeds | $350,750 |
| Capital left in the deal | $44,800 |
Monthly Cash Flow
| Item | Monthly |
|---|---|
| Rental income | $2,300 |
| Mortgage payment (30yr @ 7.25%, $356K loan) | ($2,429) |
| Property taxes | ($185) |
| Insurance | ($125) |
| Maintenance reserve (5%) | ($115) |
| Vacancy reserve (5%) | ($115) |
| CapEx reserve (5%) | ($115) |
| Net monthly cash flow | -$784 |
Negative Cash Flow. Is This Still a Good Deal?
In a high-rate environment, many BRRRR deals in Colorado will show negative or break-even cash flow at 75% LTV. This is normal and does not mean the deal is bad. Here is why investors still do these deals:
- Appreciation: At just 3% annual appreciation, this $475K property gains $14,250 in equity per year
- Mortgage paydown: The tenant is paying down principal, adding roughly $4,800/year in equity in the early years
- Rent growth: Colorado rents have grown 3-5% annually. Within 2-3 years, this property likely cash flows positive
- Refinance later: When rates drop, refinancing to a lower rate immediately creates positive cash flow
- Tax benefits: Depreciation on a $475K property (minus land value) provides roughly $12,000-$14,000 in annual tax deductions
The total return (appreciation + paydown + tax benefits) on the $44,800 left in the deal is substantial even with negative monthly cash flow.
Improve Cash Flow
To make the numbers tighter, consider: refinancing at a lower LTV (70% or 65%), leaving more capital in the deal but gaining monthly cash flow. Or target lower-priced markets like Greeley or east Colorado Springs where purchase prices are lower relative to rents.
5. Common Mistakes
BRRRR rewards disciplined execution and punishes sloppy analysis. These are the mistakes that trip up investors. Especially on their first few deals.
Over-Estimating ARV
This is the number one killer. If your ARV is wrong, everything downstream breaks. Your refinance comes back lower than expected, and you leave more capital in the deal than planned. Always use conservative comps. If the range is $460K - $490K, use $465K, not $490K. Better to be pleasantly surprised by a higher appraisal than stuck with too much capital in a deal.
Under-Estimating Rehab Costs
Always include a 10-15% contingency on your rehab budget. In Colorado, common budget-busters include: foundation issues discovered during demo, old galvanized plumbing that needs full replacement, asbestos in older homes, and permitting delays. Get contractor bids before closing, not after.
Not Accounting for Vacancy
Even in tight rental markets, plan for 1-2 months of vacancy between the rehab completion and placing a tenant, plus ongoing vacancy reserves (5% of gross rent). Tenant turnover happens, and every vacancy month is pure cost while you carry the mortgage.
Skipping Inspection
Even if you are buying a property that clearly needs renovation, always get a professional inspection. An inspector will find things you will miss: sewer line issues, structural problems hidden behind drywall, water intrusion paths, electrical hazards, and code violations. A $400 inspection can save you $40,000 in surprises.
Ignoring Seasoning Requirements
If you buy with cash or a hard money loan and plan to refinance in 3 months, but your lender requires 6 months of seasoning, you are carrying that expensive financing for 3 extra months. Know your refinance lender's requirements before you buy.
Over-Leveraging
BRRRR makes it possible to scale fast. But scaling too fast with thin margins and high leverage is how investors get into trouble. One unexpected repair, one prolonged vacancy, or one market correction can cascade across an over-leveraged portfolio. Build cash reserves before scaling aggressively.
6. Colorado-Specific Tips
Property Taxes
Colorado has some of the lowest effective property tax rates in the nation. The residential assessment rate is currently set by the state legislature and has been trending downward in recent years. This is a significant advantage for BRRRR investors. Lower taxes mean better cash flow compared to states like Texas, Illinois, or New Jersey where property taxes can consume a large portion of rental income.
However, be aware that some newer developments in Colorado have metropolitan districts (metro districts) with additional mill levies that can significantly increase the effective tax rate. Always check for metro district inclusion before purchasing. See our deep dive: Colorado property taxes for investors →
Landlord-Tenant Law Basics
- Security deposit: No statutory limit on amount in Colorado, but must be returned within 30 days of lease termination (or 60 days if stated in the lease)
- Late fees: Must be "reasonable". The standard is 5-7% of monthly rent or a flat fee of $50-$75
- Eviction timeline: Colorado requires a 10-day notice to pay or vacate for non-payment. After the notice period, the eviction process typically takes 3-6 weeks through the courts
- Habitability standards: Colorado's Warranty of Habitability Act (updated 2019) requires landlords to maintain properties in a condition fit for human habitation, including functioning heating, plumbing, and electrical systems
- Rent control: Colorado does not have statewide rent control. However, some municipalities have been exploring tenant protection measures, so stay informed on local ordinances
- Rental licensing: Some Colorado cities (Boulder, Denver, Lakewood) require rental licenses or registrations. Check local requirements before renting.
Best BRRRR Markets in Colorado
Colorado Springs: The best value play on the Front Range right now. Purchase prices are 30-40% below Denver, rents are strong (military BAH provides a floor), and population growth is outpacing Denver in percentage terms. The east side and Powers Corridor offer the best BRRRR opportunities.
Thornton / Northglenn / Westminster: North Denver suburbs with older housing stock (1960s-1980s ranches) that trade at a discount to south Denver suburbs. These homes are prime BRRRR candidates. Functional layouts that appraise well after renovation, and rental demand from professionals commuting to downtown or the tech corridor.
Aurora (East): Significant investment around Anschutz Medical Campus and Fitzsimons. Affordable entry points with strong rental demand from hospital workers and university staff. Older homes in original Aurora neighborhoods are well-suited for BRRRR.
Greeley / Evans: The most affordable market on the Front Range with strong rental demand from UNC students, energy sector workers, and families priced out of Fort Collins and Loveland. Lower purchase prices mean better cash flow and less capital left in each deal after refinance.
Pueblo: Emerging market with very low entry points ($150K - $250K). Strong rental demand relative to inventory. Higher cap rates than anywhere else on the Front Range. The trade-off is slower appreciation and a smaller tenant pool.
Market Selection Strategy
For your first 1-3 BRRRR deals, prioritize markets where you can recover the most capital on the refinance (high ARV relative to purchase + rehab cost). Once you have a system in place, you can branch into cash-flow-focused markets where the monthly numbers are stronger even if the capital recovery is smaller.
Informational only. This guide is for general educational purposes and reflects market conditions and figures available at the time of writing. Real estate markets, prices, and regulations change — verify current figures and consult a licensed real estate, financial, or legal professional before making investment decisions. EZ Investments is a real estate company, not a financial advisor.