Why the BRRRR Method Still Works in 2026 (If You Do This) - The Paul Morris Podcast

Podcast Summary: Radical Wealth Plan

Episode: Why the BRRRR Method Still Works in 2026 (If You Do This)
Host: Paul Morris
Date: January 12, 2026

Episode Overview

In this episode, host Paul Morris addresses the pressing question facing many real estate investors in 2026: Is the BRRRR method—Buy, Rehab, Rent, Refinance, and Repeat—still viable in today's higher-interest, less forgiving market? Bucking conventional wisdom, Paul argues that the BRRRR strategy can absolutely still work if investors adapt to new market realities and exercise stricter discipline. He breaks down the shifts in the real estate landscape, essential rule changes, and actionable advice for success in the current environment.

Key Discussion Points & Insights

1. Setting the Stage: Is the BRRRR Method Dead?

Timestamps: 01:19–03:10

Paul addresses the skepticism around the BRRRR method in 2026, acknowledging widespread doubt among experts.
Stresses that the advice given is for educational purposes—consult professionals before acting on any investment.

2. The Three New Realities in 2026

Timestamps: 03:11–08:05

A. The Cost of Money
- Interest rates have doubled from ~3% (2020) to over 6% (2025–26).
- “The cost of money is very important in a BRRRR deal, and that cushion of a 3% cost of money is totally gone.” (Paul Morris, 03:30)
- Investors can no longer count on cheap debt to juice returns.
B. Stagnation of Rent Growth
- Rental rates are no longer reliably rising year-over-year; past assumptions of ever-increasing rents no longer hold.
- "I never underwrite appreciation in a property. I never underwrite increased rents based on doing nothing..." (Paul Morris, 06:20)
- Future projections should not bank on rent inflation unless true value is being added.
C. No Built-In Appreciation
- Do not underwrite deals assuming property values will automatically increase.
- "Every time I see a pro forma that’s taking into account increased appreciation, I write that totally off. If writing that off makes it a deal not worth doing, I'm not doing the deal." (Paul Morris, 07:45)
- Deals must be solid based on stable or conservative appreciation/rent estimates.

3. The Five Essential Adjustments for BRRRR in 2026

Timestamps: 08:06–17:45

Paul outlines five recurring mistakes and how to avoid them in the current cycle.

1. The Margin Break: Buy It Right
- Most vital rule: "You gotta make money on the way into the deal."
- Tighter margins mean execution risk is higher; relying solely on skilled execution isn’t enough.
- "I actually believe that there are more opportunities in 2026 to buy something right than there were in the years before...that’s going to be a tremendous discount." (Paul Morris, 10:25)
- Distressed sellers with low-rate legacy debt create new buying opportunities.
2. Rehab Realism
- Always build in at least 10–20% more time and cost on rehabs.
- "I'm always building in at least a 20% additional cost for it's going to take a little longer. It's going to cost a little bit more. That wipes out the entire profit for the old BRRRR method." (Paul Morris, 12:55)
- Passing on slim deals is safer than risking budget overruns.
3. Stable Rent Assumptions
- Underwrite deals with stable (not growing) rents unless value is being added through upgrades.
- "I'm not underwriting as if rents are going up. Rents might go up...But it's not based on the rental market going up. It's based on that particular property. You're improving it." (Paul Morris, 14:10)
4. Lending Conditions: No Guaranteed Refi
- Cash-out refinances are tougher to execute due to stricter lending standards and higher rates.
- “Don’t count on [the refi] as a guarantee...definitely not how I’m viewing this.” (Paul Morris, 15:40)
- Focus on the buy, rehab, rent—and treat refi as a strong possibility, not a certainty.
5. Lower Velocity: Can't Count on Full Cash-Out
- Don’t assume you'll get all your invested cash (or your investors’ cash) back during refi; adjust investor expectations accordingly.
- “You cannot count on that. So as long as you're not counting on that...each one of these things takes you right back to the first rule: buy it right.” (Paul Morris, 16:55)

4. Final Recap and Motivation

Timestamps: 17:46–19:05

BRRRR isn’t dead—but it requires stricter underwriting and discipline than ever before.
"Done right, the BRRRR method is still alive and well in 2026." (Paul Morris, 18:05)

Notable Quotes & Memorable Moments

"You gotta make money on the way into the deal." (Paul Morris, 10:15)
"The cost of money is very important in a BRRRR deal, and that cushion of a 3% cost of money is totally gone." (03:30)
"I'm not underwriting as if rents are going up...It's based on that particular property. You're improving it." (14:10)
"Done right, the BRRRR method is still alive and well in 2026." (18:05)

Timestamps for Key Segments

01:19 — Introduction: Is BRRRR dead in 2026?
03:11 — The three new market realities
08:06 — The five critical mistakes and how to correct them
17:46 — Final advice & recap

Takeaways for Listeners Who Haven’t Tuned In

BRRRR is not dead, but it's not business as usual: the era of automatic returns from rising markets is over.
Success in 2026 is about buying distressed assets at genuine discounts, planning for realistic project overruns, and resisting the urge to project appreciation or rent growth beyond value-added improvements.
Paul's recurring mantra: buy right, be conservative, and recalculate for the new lending and economic realities before attempting the BRRRR method this year.

If you want to keep up with evolving real estate strategies, adapt to the times, and are willing to do the work, Paul’s analysis shows there’s still room for wealth creation through BRRRR. Just make sure you’re sharper than ever, and never forget to buy it right.

Drop feedback or questions in the comments! If you found this helpful, support the podcast and subscribe for future insights.

Transcript

A (0:00)

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B (1:03)

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A (1:19)

One of the questions we've been getting a lot of is, is the BRRRR method dead in 2026? And most folks are saying, yes, I'm going to give you an answer that is slightly different than that. And note, as always, this is just for educational purposes. When you look at a deal, you've got to consult with professionals and not rely on what we talk about. On this podcast, talk to your cpa, your lender, whoever gives you professional advice on a specific deal. So let's dive in. BRRRR stands for Buy, Rehab, Rent, Refinance and Repeat. Can we do that in 2026? Lots of experts are saying no. I'm saying done right, it can be done. There are five basic ways that ruin the BRRRR deal, and that is some softness that was in the market before, which if we replace that market softness with real discipline, you can still have great bird deals in 2026. In the 2026 environment, there are three things that have changed and that's going to change the way that you look at deals. Frankly, if you listen to the stuff that I've talked about before, these three things weren't things that I relied on to begin with. And one of them is the cost of money. The cost of money in the last five years has essentially doubled at the bottom of the market. Sort of 2020 interest rates were roughly around 3%. Now at the end of 2025 they are roughly 6%. It's give or take more than 6%. So interest rates have more than doubled. The cost of money is very important in a bird deal. And that cushion of a 3% cost of money is totally gone. The second number that you have to respect in 2020 and that is sort of rent stabilization now. Oh, actually I meant 2026. Sorry about that. When I underwrite any deal, whether it's BRRRR or not, and generally I'm not doing a rehab and flip and fix and sell and redo it. I'm generally buying value add. I'm adding the value and holding onto it. Although the thing that's great about the BRRRR method is the velocity of money. So the people that were doing great with BRRRR are essentially taking the same assets that I have and they're churning them over and over and over again and frankly they're getting a lot further. So I'm taking money, I'm investing in something that is a value add. I'm adding the value, I'm doing all the things that, that those folks are doing, except I'm not refinancing, getting all my money back and then rinse and repeat. So I'm doing those things and then I'm holding. And so that's my long term play. Burr method is not a long term play. It is really taking advantage of the velocity of money. It's great strategy, it's just tougher to do. And one of the things that people wrote into their deal was accelerating rents. And in 2026 we're not looking at, we don't know exactly what's going to happen, but we cannot predict that rates, that rental rates, that rental income is going to accelerate. Now when I underwrite a deal, I'm never looking at accelerating rents at the current market. Certainly I'm looking at higher rents based on adding value to a property. So I'm taking the rents that are at the B minus property. That's how I'm buying it. I'm adding value to it. I'm turning it from a B minus into an A minus. Probably not an A or an A plus. That A minus is going to get a lot higher rent. But it's not because rents are accelerating as a general matter. It is because I'M adding value. So I never fell into that pitfall. And in doing brrrr in 2026, you should definitely avoid looking at rents that are going to increase. It doesn't mean that you can't look for higher rents in a BR property. You still can do that, but it's got to be based on the value add. I never underwrite appreciation in a property. I never underwrite increased rents based on doing nothing like, oh, rents. Rents are just going to keep going higher and higher. Now there are. You ask different economists, you're going to get different answers. They're going to tell you that, that the housing stock is not meeting demand, therefore the cost of housing is going to increase, therefore the cost of rents are going to increase. I believe that to be true. But if you look at the actual facts you're going to see on Zillow and some of the big aggregators, you're seeing a slight decrease in rents over time. I don't think that's going to stay for long, but it doesn't matter. You just don't underwrite growth in rent and you'll be safe. Also, the third one I already touched on, and that's the appreciation reality. Again, not something. If you've listened to me on other podcasts talking about other methods, I'm not doing this for the Burr method. I'm not doing it for the things that I do, which is a value add method. I'm not looking at appreciation. Now, real estate can go up and it can go down over time. You know, historical show that it does go up, but I'm not underwriting based on, oh, it's going to be worth more money next year. So I'm going to count that into a pro forma. Every time I see a pro forma for a piece of real estate that's for sale and they're taking into account increased appreciation, I write that totally off. If writing that off makes it a deal not worth doing, I'm not doing the deal. Same thing with the BRRRR method, and that is you. You've got to look at the asset as being stable and you underwrite it without appreciation. And that's the third rule that really needs to be broken in 2026 to make Brrrr work in 2026. Okay, so I just talked about, in 2026, there are three numbers you must respect, and that's the cost of debt and rent growth really being stable at best. And then also the reality of not building appreciation into your model. A bit of overlap, but I'M going to talk about the five predictable things that you've got to do differently in 2026 so that you don't fall trapped to the old version of brrrr. And here they are. The first one really is the margin break, which goes right back to you didn't buy it right. And I always say you've got to make money on the way into the deal. I. I'm always making sure that I'm buying it right. And when I'm buying it right, then it relieves a lot of things there, leaves room for error. I watch people that do brrrr and they're so good at it that they're buying very tight and they're relying on execution and they're making very little money on each one, but they're still doing great because they're doing it over and over again. That's not a deal that I could do that I personally could do even in 2024 or 2025. That doesn't work for me. It wouldn't have worked for me then. It definitely is not gonna work for me in 2026. So how can you make it work for you in 2026? You've gotta buy it right. And what buying it right means is you've gotta find the great value add property. And I actually believe that there are more opportunities in 2026 to buy something right than there were in the years before. And that is because there is debt on properties that people bought before when the interest rates were 3% and now they're doubling. And people need to get out of that and they need to get out of that property. The only way they can get out of that property is by selling it at a price that makes sense right now. And that's going to be a tremendous discount. So buying it right actually is going to be even easier in 2026. But you've got to buy it right. You cannot do the old brrrr method where you're buying on the margin. I never did it in the past, mainly because I wasn't as good at execution as other folks were. So I knew that I needed to buy it right on the way in. And once you do that, you've got a lot of safety net ahead of you. So the break number one is the margin and make sure you're buying it right 2026, there's gonna be a lot of opportunity for that, you know. And what's happening different in 2026, again, because those margins are tighter, you cannot give yourself a break on the Reh. Something I ever did I just mentioned before, I already know that I'm not going to be. I'm not going to be able to deliver a product exactly on time and exactly on budget. So you got to buy, right? Which is back to the first rule. And then you've got room in the rehab. So I'm always building in at least a 20% additional cost for it's going to take a little longer. It's going to cost a little bit more. That wipes out the entire profit for the old brrrr method. And that's why people are saying it's dead for me. It didn't exist to begin with. So you had to buy it, right? Then you've got lots of room. And when you buy it right, you've got lots of room. Then you have room for error on a rehab. And of course, I'm going to try and hit the dates and I'm going to try. And I'm gonna try and hit the budget. I'm gonna be very careful. And so to those folks that were doing brrrr in the years before, now's the time to really sharpen your pencil and make sure that your rehab, your rehab budget is dead on. And also add at least 10%, 15% if you're me, 20%, so that you can get into a deal that you know is a good deal, and you'll pass on a lot of deals that other people were doing in 2025 and before, and that will keep you safe in 2026. And that is the rehab break, the rent break. We already talked about this already. And that's. I'm not underwriting as if rents are going up. Rents might go up. And you know, the experts are saying year over year, rents are down a little bit. That's not where I see things going. But I'm never underwriting based on rents going up unless I'm adding value. You should add value. You should get higher rates. But it's not based on the rental market going up. It's based on that particular property. You're improving it. You deserve more rent. You can definitely count that in 2026. And so basically what you're doing is you're underwriting as if the whole rental market is staying even, but you definitely can count on a higher rent for the property that you've improved because you're taking something at a certain rent, you're improving it, and now it's a different product. So you're going back into the same rental market, but you're going there with a better product and that better product is going to command higher rents. That is going to keep you safe in 2026. And lending has gotten tougher. So we know that in a big piece of brrrr, obviously one of the Rs is the refi and it's the cash out refi. But now as, as the margins have gotten a lot tighter in lending as rates have gone up, it's a lot harder to get a money out refi. So don't count on that as a guarantee. Back in the day, two, three years ago, people were counting on that refi. Hey, I'll get you all your money back. They would have an investor. I'll get you all your money back in the refi. We'll keep going. Definitely not how I'm viewing this. So you can do the buy rehab rent and then hold the brakes and are you going to get a cash out refi or not? I believe again, if you buy it right, you're adding the right value. You're going to add add value such that you could get a refi. But don't bank on that refi. And that's something else to be very careful about in 2026. You can definitely do it, but you've got to do the other things, right? And lastly, totally related is, you know, getting all of your money back on that refi and you just can't count on it anymore. You can certainly improve it and get money back, but getting all of your money back, returning all of your investors money, you know, you borrow money to do the, to do the rehab, you've got to pay that money back. I'm going to refi and pay all of that construction loan back. You cannot count on that. So as long as you're not counting on that again, each one of these things takes you right back to the first rule and that's buy it right. Which has always been a rule for me. And you may not have that velocity of money that you had in 2024 or 2023 and all the way back to 2022 where people were just slamming these deals and doing multiple deals with one after the other. It is 2026 and so you've got to be more careful about it, but it doesn't mean that you can't do it. Follow these rules and the BRRRR method is still going to work for you in 2026. My recap on it is done right. The BRRRR method is still alive and well in 2026. If you disagree with it. Drop some comments if you do agree, drop some comments Definitely Looking forward to your feedback. Don't forget to like and subscribe. It supports our channel and we'll keep bringing great information to you.