Build to Rent (BTR) vs. BRRRR: Which Strategy Is Right for You?

You've successfully flipped a number of houses or built them to sell. But while you've been able to turn good profit, you can't deny that the grind is relentless.

Now you're looking to scale but you want to do this in a way that's potentially more sustainable and that fits your lifestyle. You want to build long-term wealth in a way that's more passive. Which strategy could get you there faster and more reliably?

For many REIs, the obvious answer is rental property investing. But there are two specific rental property strategies gaining traction among REIs right now. The first one is the classic BRRRR (Buy, Rehab, Rent, Refinance, Repeat) method. Next is the increasingly popular BTR (Build-to-Rent) model.

To see why these two strategies are gaining attention, let's quickly see what's happening in the fix-and-flip market.

In Q3 2025, fix-and-flip selling prices dipped roughly 4% year-over-year, while average gross profit margin from flips decreased slightly to 25.1%, according to ATTOM data solutions.

Additionally, 30% of home flippers reported "good" sales in Q2 2025 compared to 38% in 2024. While fix-and-flip remains a viable and potentially lucrative strategy for many, these shifts could highlight the importance of exploring alternative approaches, especially for those seeking more predictability and scalability.

If you're an experienced REI, flipper, small-scale builder, or developer looking to transition from active income to building a resilient rental property portfolio, this article is for you.

We'll compare the BRRRR and Build-to-Rent strategies across five key criteria:

• Profit potential and equity creation
• Risk, predictability, and maintenance
• Scalability
• Capital requirements and skill level
• Market resilience in today's economy

By the end of this guide, you'll have the insights you need to choose the approach that aligns with your goals, skills, and available capital.

Quick overview: Understanding both strategies

First, let’s examine both strategies.

The BRRRR Method (Buy, Rehab, Rent, Refinance, Repeat)

The BRRRR method is a rental property investing strategy that could help create long-term cash flow by adding value to properties. It focuses on increasing property value through renovations, instead of solely relying on market appreciation. Here’s a breakdown of how it works:

BRRRR Steps:

1. Buy: Purchase under-valued or distressed properties.
2. Rehab: Renovate them to boost their value.
3. Rent: Rent out the property to generate income.
4. Refinance: Refinance based on the new, higher value of the property.
5. Repeat: Use the pulled-out equity as the down payment for the next property.
   
   

Here's how the numbers might work:

• Property Purchase: $100,000
• Rehab Costs: $50,000
• New Appraised Value: $280,000
• Cash-Out Refinance at 75% Loan-to-Value: $210,000
• Net Cash Available After Loan Payoff ($100k): $110,000

The remaining $110,000 could be used to invest in another property. This approach might help investors scale their rental portfolios faster while also generating cash flow from the rental properties.

The final step—Repeat—is essential for scaling. By recycling capital, investors may be able to grow their portfolios more efficiently. For instance, a recent article by Business Insider highlighted how two part-time rental property investors scaled from 0 to 24 rental units in just one year using this method.

Key advantages:

• Capital recycling allows for fast portfolio growth, without the need to save for a down payment every time.
• You could have more control over equity growth and may access equity faster.
• You could get tax deductions from depreciation and cost segregation.

Typical Profile: This strategy may work best for hands-on REIs, comfortable managing contractors, dealing with rehab surprises, and navigating refinancing hurdles.

Build-to-Rent (BTR) Strategy

As the name implies, in the build-to-rent strategy, you construct rental properties from the ground up to rent out to tenants. Instead of rehabbing existing buildings, you buy land or tear down old structures to construct new properties for your rental portfolio.

This approach could be less risky and more resilient to market headwinds. “If you can dial in, create a realistic budget, you can reduce your risk in new construction,” explains Tom Hallock, Head of Construction Lending at Kiavi.

Key advantages:

• Predictable budgets
• Lower maintenance
• The flexibility to design to the taste of modern tenants.

Institutional research shows stabilized BTR assets cost 22-30% less to maintain than traditional long-term rental (LTR) properties. They also have a 96% occupancy rate on average, with 25-35% longer average tenancy.

Typical Profile: REIs seeking turnkey assets with potentially more predictable expenses, those transitioning from flips to hold strategies, and builders seeking an alternative to the volatile build-to-sell model.

The Hybrid BBRRR Method

When you combine the capital recycling advantage of the BRRRR method with the predictability of new construction, you get the novel BBRRR method. This stands for buy land, build, rent, refinance, and repeat.

This modern approach, gaining traction in expert REI circles and being discussed in dedicated REI forums, adapts the BRRRR strategy for the current market. Instead of buying and rehabbing a rundown property, you build a new one from the ground up.

If you secure land at a reasonable price, find cost-effective construction materials, and contribute some sweat equity, the completed property's value could exceed the total costs. Instead of selling, you rent it out, do a cash-out refinance, and repeat the process. This strategy may allow you to grow your portfolio with potentially low-maintenance assets over time.

BRRRR vs Build-to-Rent

Let’s compare both methods in terms of profit potential, equity creation, scalability, risk, and suitability for the current market.

1. Profit potential & equity creation

With the BRRRR method, your profit is established early, as you're likely to buy the property well below its After-Repair Value (ARV). The equity you create through renovations allows you to refinance, recover your capital, and repeat the process. The value is captured in the initial discount.

In build-to-rent investing, you create equity by securing land at a good price and managing construction costs efficiently. When done correctly, the completed building could be worth more than the cost of the land, labor, and materials combined. Stabilized build-to-rent homes could deliver 12-15% IRRs over a 5-year hold period, according to Canvan Properties, a major BTR builder.

With homebuilders offering incentives up to 7.5%, and new build sales prices declining by 2% in September, according to JBREC, the build-to-sell market appears challenging. For builders and developers, build-to-rent shifts the focus from slim sales margins to cash flow and long-term appreciation.

Winner: BRRRR. For a single deal, BRRRR could offer a clearer path to capital recycling. Plus, purchasing a single discounted property may create an instant equity advantage that a single new construction may not match.

2. Risk, predictability, and maintenance

Your biggest financial risk in a BRRRR deal might be rehab cost overruns. “When you buy a fixer-upper, you don't know what's behind the wall or what's going on with the foundation," says Kiavi's Tom Hallock, Head of Construction Lending.

Unforeseen issues could often lead to exceeding budgets and timelines on BRRRR projects. Longer timelines could mean higher holding costs during renovations. Additionally, long-term maintenance costs could be higher. Older properties with deferred maintenance typically require $1.27 per square foot in annual maintenance costs, compared to $0.62 per square foot for newer properties—a 51% cost difference.

Build-to-rent (BTR) properties might offer a more predictable alternative. With BTR, budgets and schedules are typically defined upfront, and major surprises are often accounted for in advance. Renters may also benefit from added peace of mind, as BTR homes often include builder warranties and, in many cases, professional property management services.

Winner: Build-to-rent. BTR appears to lead in predictability and could reduce long-term maintenance challenges.

3. Scalability

A potential disadvantage of the BRRRR method is that scaling could often depend on deal flow. You might have to constantly be on the lookout for distressed properties.

Build-to-Rent (BTR), on the other hand, is often designed for scale. You create your own inventory instead of always searching for deals. You could have more control over your pipeline. With the build-to-rent model, once you've acquired a tract of land, you could replicate floor plans, and systematize building processes and material choices across multiple homes.

As Kiavi's Tom Hallock puts it, you can "start scaling your business... [and] take advantage of vendor discounts" instead of "always having to be hunting for that next piece of property."

Winner: Build-to-rent. BTR provides a clearer path to building a repeatable business, without having to constantly chase new deals.

4. Capital requirements and skill level

With some education and a little bit of experience, a small-scale REI could find and obtain financing for a BRRRR deal.

These deals sometimes require a 20% down payment, with hard money loans financing renovation expenses.

For anyone already experienced with property flipping, the skills—project management, budgeting, and contractor oversight—often seem like a natural next step.

Build-to-rent could demand more capital and require a more sophisticated skillset. As a BTR investor, you likely need to be experienced in or have someone who's experienced in the following: land acquisition, navigating zoning changes, and managing ground-up construction projects that could take between 18-36 months to complete.

Winner: BRRRR. Potentially the more accessible strategy for REIs with limited budgets and limited ground-up construction experience. BTR becomes more viable when you have substantial capital reserves or can partner with an experienced developer.

Building for today's market: Which strategy is more resilient?

Fluctuating interest rates and market uncertainty could impact both strategies. With the 30-year fixed rate mortgage projected to stay around 6%+ through 2026, cash-out refinances at high LTVs may face challenges. Additionally, under-construction BTR projects could experience delays due to labor and material cost volatility.

However, the market also offers opportunities for BTR developers and real estate investors. According to JBREC + Kiavi’s October 2025 analysis, construction costs are declining for the first time in a decade as large production homebuilders reduce starts. Labor and land costs are softening, with production builder starts down 20% year-over-year on average across the U.S.

For fix-and-flip investors, transaction volume was down 7.2% year-over-year as of Q2 2025. This may create opportunities for developers, particularly in infill locations, given the reduced competition from like-new homes. Smaller developers might also find it more cost-effective to build in the current environment.

Winner: While both require careful planning, current market dynamics could give an edge to BTR.

Kiavi Tip: Watch Kiavi’s Head of Construction Lending, Tom Hallock’s discussion with Alex Thomas from John Burns Research and Consulting on 2025 home construction trends and the opportunities arising in the BTR space. Watch the webinar.

The verdict: Which strategy is right for you?

You might choose BRRRR if:

• You're newer to real estate investing, but have a few deals under your belt.
• You're working with limited capital ($60k-$80k to start).
• You excel at finding undervalued deals, and want to force appreciation through high-impact renovations.
• You are comfortable actively managing renovations, overseeing contractors, and handling rehab surprises.

You might choose build-to-rent (BTR) if:

• You're a builder, flipper or REI seeking to build premium, low-maintenance rental properties.
• You have or can access substantial capital ($160k+ per unit) and the skills needed for ground-up developments.

Or consider the BBRRR (Buy Land, Build, Rent, Refinance, Repeat) strategy to get the best of both worlds—capital recycling and low-maintenance new construction.

Conclusion

We hope this deep comparison of BRRRR vs build-to-rent has given you clarity on which strategy might be right for you.

Whether you're considering a bridge loan for BRRRR or a new construction loan for build-to-rent, you can get streamlined financing with Kiavi. Start here.

Frequently Asked Questions (FAQs)

1. Is it better to flip or BRRRR?

Both are entirely different strategies. House flipping is a short-term real estate investing strategy, where the goal is to sell the property for a profit. In BRRRR investing, you're looking to build rental properties and generate long-term cash flow while forcing equity in the short term.

With property flipping, you end up with a potentially profitable sale, while with the BRRRR method, you end up with a potentially cash-flowing long-term rental (LTR).

2. What is the 7% Rule in Real Estate?

The "7% rule" is a guideline that suggests a property should bring in 7% of its purchase price in annual rental income to be considered a good deal.

While this rule could quickly help you assess a property's profitability, it should always be verified with other metrics.

3. What are the disadvantages of BRRRR?

Some of the biggest risks are budget overruns during rehabs, refinancing challenges in a high interest-rate environment, and the constant maintenance issues that might come with older properties.

4. Is Build-to-Rent (BTR) a good investment?

Yes, it can be an excellent investment. It creates a high quality asset in a market with strong rental demand, allowing REIs to generate cash flow and also benefit from steady long-term appreciation.