BRRRR stands for buy, rehab, rent, refinance, repeat. You buy a property that needs work at a discount, fix it up, place a tenant, then refinance based on the new, higher value to get most of your cash back. That cash funds the next deal, and you keep the rental.
Example: you buy a house for $120,000 in cash, spend $40,000 on rehab and pay $10,000 in closing and holding costs, so you have $170,000 in. It appraises at an after-repair value of $220,000. A lender offers a refinance at 75% loan-to-value: $220,000 × 75% = $165,000. After $5,000 in refinance costs you get $160,000 back. You have $10,000 left in the deal and $55,000 of equity ($220,000 minus the $165,000 loan).
The refinance is where BRRRR deals go wrong. If the appraisal comes in at $200,000, the loan drops to $150,000 and you leave $25,000 in the deal instead of $10,000. Many lenders also require a seasoning period before they will lend on the new value, and loan-to-value limits vary by lender. Finally, the rent has to cover the new, larger mortgage payment plus operating expenses. Getting all your cash out means little if the property then loses money every month. All figures here are pre-tax.