BRRRR in 2026: Finding Undervalued Properties With AI
The BRRRR method built more millionaire landlords than any other strategy — but in 2026, the game has changed. Finding deals that actually work requires better data, faster analysis, and an edge your competitors don't have. AI is that edge.
I've been doing BRRRR deals since 2018. Back then, you could literally drive around neighborhoods, spot a house with overgrown grass and boarded windows, knock on doors, and stumble into equity. Those days are gone. Now you're competing against hedge funds with acquisition teams, wholesalers blasting every absentee owner in the county, and fellow investors who've read the same BiggerPockets posts you have.
But here's what I've learned over the past year: the investors who are still crushing it with BRRRR aren't working harder. They're working smarter. And the smart ones are using AI to find, analyze, and close deals faster than everyone else.
Let me show you exactly how.
The BRRRR Method in 2026: Why Traditional Deal-Finding No Longer Works
Quick refresher for anyone new to the strategy: BRRRR stands for Buy, Rehab, Rent, Refinance, Repeat. You buy a distressed property below market value, fix it up to force appreciation, rent it out for cash flow, refinance to pull your capital back out, and use that capital to do it again.
When it works, it's beautiful. You end up owning a cash-flowing rental with little to none of your own money left in the deal. Do it enough times and you've built a portfolio that pays you every month while your tenants build your equity.
But here's the 2026 reality check.
Margins are tighter than they've been in years. With mortgage rates hovering around 7% for investment properties, your refinance costs more, which means you need to buy cheaper or rehab smarter to make the numbers work. The spread between purchase price and ARV has to be bigger than it was when rates were 4%.
And the competition? It's brutal. Every investor with a pulse is hunting the same distressed properties. Wholesalers are hitting the same absentee owner lists. The low-hanging fruit got picked years ago.
The old way of finding BRRRR deals — driving for dollars, manually pulling tax records, guessing at rehab costs from a street view — just doesn't cut it anymore. You need an unfair advantage.
Why Most BRRRR Deals Fail Before They Start (And How to Avoid the Traps)
I've seen more investors blow up on BRRRR deals than any other strategy. And here's the thing: the failures almost always happen before the deal even closes. They fail at the buy.
The Bad Buy Problem
Most investors overpay because they underestimate rehab. They see a property listed at $120K, figure it needs $30K in work, calculate an ARV of $200K, and think they're looking at a home run. Then they get in there and find foundation issues, outdated electrical, and a roof that's one storm away from caving in. Now that $30K rehab is $65K, and suddenly the deal doesn't work.
The Bad ARV Problem
This one kills deals at the refinance stage. You comped the property at $200K based on a house three streets over that sold last year. But that comp had a finished basement and yours doesn't. The appraiser comes in at $175K, you can only pull out 75% of that, and now you've got $40K stuck in a deal you planned to recycle.
The Bad Rehab Budget Problem
Hidden issues are deal killers. You can't see mold behind walls from the listing photos. You can't spot knob-and-tube wiring from a drive-by. And by the time you're knee-deep in demo, it's too late to walk away.
The old way of avoiding these problems was experience and gut instinct. Drive around, eyeball properties, guess at numbers based on similar projects you'd done before. That works if you've done 50 deals in the same market. It doesn't work if you're scaling into new markets or trying to analyze 20 properties a week.
The AI-Powered BRRRR Stack: How JPS Tools Transform Every Phase
Here's where things get interesting. Let me walk you through how I use JustPropertySearch to run my BRRRR operation now versus how I did it three years ago.
Finding Candidates (The Buy Phase)
Remember when finding off-market properties meant paying $500 for a stale list from a data broker? Or spending your Saturdays driving around sketchy neighborhoods looking for boarded-up windows?
Now I just type what I'm looking for. Literally.
JPS has this AI search feature where you can describe your ideal property in plain English. Last week I ran: "Show me vacant single-family homes under $150K in Memphis with absentee owners held 10+ years."
Think about what that query is actually doing. It's filtering for vacancy (likely distress), low price point (room for spread), absentee owners (motivated sellers who aren't emotionally attached), and long hold times (probably inherited or just tired landlords ready to dump).
I got 47 results. In 2019, pulling that list would have taken me a week of cross-referencing county records, skip tracing, and manual vacancy verification.
But here's what really changed my game: Live Lists.
You set your criteria once, and the system auto-updates daily with new properties that match. So when a 12-year owner finally decides to abandon their rental in my target zip code, I know about it within 24 hours. Not weeks later when some wholesaler has already locked it up.
The vacancy detection alone has saved me countless hours. The AI analyzes utility data, occupancy signals, and property conditions to flag likely vacant properties. No more driving around hoping to spot tall grass.
Analyzing the Deal (Rehab and ARV Phase)
This is where Lumen AI has completely changed how I evaluate properties.
You upload listing photos — or even pictures you grabbed from a drive-by — and the AI analyzes visible conditions to estimate repair costs. It looks at flooring condition, cabinet age, roof appearance, window types, and dozens of other factors.
Is it perfect? No. But it's right often enough to save me from wasting time on properties that are clearly money pits. Last month I was ready to schedule a walkthrough on a duplex until Lumen flagged significant water damage visible in the basement photos. I'd looked at those same photos and missed it. The AI caught discoloration patterns on the foundation walls that indicated ongoing moisture issues.
Deal scoring gives you an instant read on whether the numbers work before you invest any more time. It pulls together purchase price, estimated rehab, rental comps, and ARV into a simple score. Green light means keep going. Red light means move on.
And the comp analysis for ARV? Way more reliable than eyeballing Zillow estimates. It weights recent sales, adjusts for differences in square footage and condition, and gives you a confidence range. If the ARV comes back as $185K-$210K with high confidence, I know I can underwrite to $185K and be safe. If it comes back $170K-$215K with low confidence, I know I need to dig deeper before making an offer.
Finding the Owner (Back to the Buy Phase)
Good deal, bad contact info = no deal.
Skip tracing is built right into JPS now. You find a property you like, click skip trace, and get phone numbers, emails, and mailing addresses for the owner. For absentee and out-of-state owners, this is gold. These are people who probably haven't thought about their property in months. A well-timed call from you might be exactly what they needed to finally let it go.
But here's the part most investors miss: owner profiling.
The AI can identify motivation signals based on the ownership structure. Is it held in an LLC that's been dormant? Probably an investor who's checked out. Did it recently transfer through inheritance? Those heirs might want fast cash, not landlord headaches. Has the owner been paying taxes late? Financial distress means motivated seller.
I specifically target long hold times and inheritance situations now. These owners are almost always more motivated than someone who bought two years ago.
Real Example Walkthrough: Finding a BRRRR Candidate Step-by-Step
Let me show you a real search I ran last month. Numbers are adjusted slightly for privacy, but the process is exactly what I do.
Step 1: Set Up the Live List
Criteria: Single-family, 3+ beds, under $130K purchase estimate, Memphis metro, absentee owner, 8+ year hold time, high vacancy probability.
I let this run for a week to build up candidates.
Step 2: Property Hits the List
A 3-bed, 1.5-bath ranch in a B-class neighborhood pops up. Tax-assessed at $95K, last sale was 2014 for $78K. Owner lives in Florida. Utility records suggest vacancy for 6+ months.
Step 3: Run Lumen AI Analysis
I pull up the county assessor photos (recent exterior shot) and a few photos from a 2019 listing when the property was last rented. Lumen flags:
- Roof appears aged, estimate 5-10 years remaining life
- Exterior paint showing wear, cosmetic repair needed
- Kitchen cabinets and counters are dated, functional but need updating
- HVAC unit visible appears original to home
Estimated rehab range: $28K-$38K for rental-grade renovation.
Step 4: Deal Scoring
I input an estimated purchase of $85K (starting negotiation point), $35K rehab (middle of the range), and let the system pull rental comps and ARV.
Rent estimate: $1,150-$1,250/month
ARV estimate: $155K-$170K (medium confidence)
Deal score: 7.2/10 — Worth pursuing
Step 5: Skip Trace and Contact
Owner is a 72-year-old retiree in Jacksonville. Inherited the property from a parent in 2014, rented it for a few years, tenant left, and he just never got around to dealing with it.
I call him directly. Turns out he's been paying property taxes and insurance on a vacant house for two years because he didn't want the hassle of listing it. He's ready to sell.
Step 6: Run Final Comps and Make Offer
I verify the ARV with three recent sales within half a mile. Confident the property will appraise at $160K minimum after rehab. I offer $82K cash, close in 21 days.
He counters at $88K. I accept.
The Numbers:
- Purchase: $88K
- Rehab: $34K (came in slightly under estimate)
- All-in: $122K
- ARV: $162K (actual appraisal)
- Refinance at 75% LTV: $121,500
- Cash left in deal: $500
- Monthly rent: $1,200
- Monthly cash flow after PITI: $285
I'm into this property for $500 out of pocket. It cash flows $285/month. That's infinite return territory.
This is what BRRRR is supposed to look like. And I found it without driving a single mile.
The Numbers That Matter in 2026: Adjusted Rules and Stress-Testing Your Deals
The classic 70% rule says you should pay no more than 70% of ARV minus repairs. In 2026, with rates where they are, I've adjusted to 65-68% in most markets.
Why? Because your refinance rate is likely 7-7.5%, not 4%. That higher rate eats into cash flow and means you need more equity cushion to hit your return targets.
Here's my current underwriting criteria:
Target cash-on-cash after refinance: Minimum 15%, prefer 25%+
Maximum cash left in deal: 10% of ARV. If I can't get most of my capital back, the deal needs to be exceptional in other ways.
Stress test for rate changes: I underwrite every deal at current rates PLUS 1%. If the deal still works at 8.5%, I know I've got margin for error.
Walk-away triggers:
- ARV confidence below 70%
- Rehab estimate variance over 30%
- Multiple structural concerns flagged
- Owner unwilling to negotiate within 5% of my max offer
I walk away from more deals than I take. That's by design. The investors who get hurt are the ones who force deals that shouldn't happen.
Common BRRRR Mistakes AI Helps You Avoid
After doing this for years, I can tell you the biggest enemy of BRRRR success isn't the market. It's yourself.
Emotional buying will destroy your returns. You fall in love with a property — the neighborhood, the architecture, the "potential" — and you start rationalizing bad numbers. AI doesn't fall in love. It just tells you what the data says. When the deal score comes back at 4/10, there's no negotiating with it.
Underestimating rehab is the classic mistake. You see photos and think "it's not that bad." Photo analysis catches what you'd miss on a casual review. Water stains. Dated electrical panels. Sagging rooflines. Things you might brush off or simply not notice.
Chasing bad leads eats up your most valuable resource: time. Before AI deal scoring, I'd spend hours analyzing properties that were never going to work. Now I filter the noise upfront. If a property doesn't score at least 6/10, I don't even run comps.
Moving too slow kills more deals than you'd think. In competitive markets, the investor who can analyze and make an offer in 48 hours beats the investor who takes two weeks. Daily data refresh plus Live Lists means I'm seeing opportunities the day they appear. That speed advantage has won me multiple deals where I was the first serious buyer to reach the owner.
Look, BRRRR isn't dead. It's just evolved. The investors who adapt — who use better tools, move faster, and analyze smarter — are still building wealth with this strategy.
The ones who are stuck doing things the old way? They're getting outcompeted by people like you who are willing to embrace the new tools.
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