BRRRR vs 85/45/24: Why Institutional Structure Beats Recycling Capital

Written by Jai Thompson

I manage a private equity platform deploying thirteen to eighteen million dollars per quarter across multiple real estate asset classes.

Our model is asset-based, escrow-directed, and execution-driven, allowing us to close in twenty-three days or less with certainty and clean title flow.

We acquire and operate across:
• Luxury estates
• Single-family residential portfolios
• Multifamily communities
• Hospitality and hotels
• Mixed-use properties
• RV parks and mobile home communities
• Golf resorts and destination assets
• Specialized housing and income portfolios

Capital is structured.
Operators are paid.
Reserves are built in.
All disbursements are controlled through escrow.

We deploy with discipline, transparency, and speed — while tithing back to the communities we serve.

The Truth: BRRRR Is Not Wrong — It’s Just Limited

The BRRRR method (Buy, Rehab, Rent, Refinance, Repeat) taught investors something important:

👉 Income creates value.

That lesson is correct.

But BRRRR was built for:

• Small assets

• Personal credit

• Cash injections

• Partners or capital raises

• Timing-dependent refinances

The 85/45/24 model keeps the income logic — and removes the fragility.

The Core Difference (Plain English)

BRRRR Model

• You buy

• You fix

• You rent

• You refinance to get your money back

• You repeat if the refi works

Your survival depends on:

• Appraisals

• Market timing

• Refinance approval

85/45/24 Model

• You structure first

• You control recorded risk

• You secure the lender

• You cash flow day one

• Refinance becomes optional, not required

One model hopes capital comes back.
The other plans for it.

5 USE CASES (AND WHICH MODEL WINS)

Use Case 1: First-Time Small Multifamily Investor (5–12 Units)

BRRRR Works When:

• You have cash

• You’re okay with personal credit exposure

• You want to learn operations

85/45/24 Is Better When:

• You want control from day one

• You don’t want partners

• You want lender safety built in

Winner:
➡️ 85/45/24 (less pressure, fewer failure points)

Use Case 2: Legacy Seller With a Paid-Off Asset

BRRRR Problem:

• Seller sees “discount”

• Rehab narrative scares them

85/45/24 Advantage:

• Recorded price keeps taxes light

• Seller sees certainty, not speculation

• Title-directed disbursements feel clean

Winner:
➡️ 85/45/24 (seller psychology matters)

Use Case 3: Distressed or Mismanaged Asset

BRRRR Risk:

• Rehab overruns

• Refi timing pressure

85/45/24 Advantage:

• Income fixes drive value

• Low recorded leverage buys time

• DSCR protects downside

Winner:
➡️ 85/45/24 (risk absorption wins)

Use Case 4: Hospitality, RV, or Mixed-Use Assets

BRRRR Fails Because:

• Income fluctuates

• Lenders demand margin

• Refi timing is unpredictable

85/45/24 Excels Because:

• Lender position is conservative

• Cash flow cushions seasonality

• Refi is upside, not survival

Winner:
➡️ 85/45/24 (institutional discipline required)

Use Case 5: Scaling Without Partners or Capital Raises

BRRRR Limitation:

• Requires constant recycling

• Often leads to partnerships

• Capital calls creep in

85/45/24 Advantage:

• Capital stack is embedded

• No investor management

• No dilution of control

Winner:
➡️ 85/45/24 (scales cleanly)

How Refinance Fits (Third-Grade Math)

Refinance is not the plan — it’s the reward.

Example:

• Property makes more money

• More money = higher value

• Bank lends on value

• New loan replaces old loan

• Extra money comes back

It’s debt, not income.
Tenants pay it back.

If refinance happens — great.
If it doesn’t — the deal still works.

That’s the difference.

Final Verdict: Which Is Better?

BRRRR is a tool.
85/45/24 is a system.

BRRRR teaches income.
85/45/24 teaches control.

For hobby investing, BRRRR can work.
For scale, certainty, and legacy — structure wins.