BRRRR Strategy in Colorado

The BRRRR strategy—Buy, Rehab, Rent, Refinance, Repeat—works well in Colorado for scaling rental portfolios, especially targeting value-add properties in suburbs like Aurora or Lakewood where rental demand stays strong despite market balance. With 15+ years in Denver real estate and thousands of transactions, I’ve guided clients through BRRRR cycles from Littleton real estate duplexes to Highlands Ranch townhomes, leveraging Colorado housing market dynamics for forced appreciation and cash flow.

Why BRRRR Fits Colorado Markets

Colorado’s job growth in tech, healthcare, and defense creates reliable tenants, with rents rising 3-5% annually. Buy distressed at 70% ARV, rehab for $40-60K, rent at 1% rule ($2K on $200K property), refi at 75-80% LTV to pull equity, repeat. Current 6.5% rates challenge cash-out refis, but balanced inventory favors deep discounts on motivated sellers.

Suburbs shine: Aurora near Anschutz yields 8% cap rates; Littleton family rentals hold steady.

Step-by-Step Execution

Buy: Target off-market foreclosures or tired rentals 20-30% below market. Focus R-2 zones for duplexes.

Rehab: Cap at $50/sq ft—kitchens return 70%. Hire DORA-licensed trades; budget 20% contingency for clay soil fixes.

Rent: Screen rigorously under Colorado tenant laws. Aim $1.8K+ for 2-beds; use property management (8-10% fees) initially.

Refinance: Wait 6-12 months seasoning; appraise at stabilized value for 75% cash-out. DSCR loans need 1.25x ratio.

Repeat: Roll equity into next deal via 1031 if selling, or cash refi.

Challenges: HOA restrictions in Highlands Ranch real estate, water rights verification, 120-day liens.

Profit Example and Risks

$350K buy + $60K rehab = $410K basis. Rent $2,500/month ($200K value), refi $300K cash-out. Net $100K equity for next purchase.

Risks: Over-renovation erodes margins; refi appraisal shortfalls in soft markets; eviction delays (45 days).

Practical Tips for Success

My roadmap from scaled portfolios:

Run ARV comps conservatively; stress-test 10% vacancy.
Use hard money (12%) for buys, refi to 30-year fixed.
Build contractor network early—local labor scarce.
Track DORA complaints; verify licenses/insurance.
Time refis for rate drops; hold 1% reserves.

BRRRR builds wealth patiently here. Clients repeating successfully become long-term friends.

If you’d like honest guidance, market insight, or a no-pressure conversation about BRRRR in your situation, reach out—I’m here. Visit www.MileHighHomeGroup.net to search properties, explore Denver, learn more about me and connect.

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