BRRRR Calculator

How a BRRRR calculation works

BRRRR (buy, rehab, rent, refinance, repeat) is a strategy built on one question: after you refinance, how much of your own money is still stuck in the property, and what does the property pay you each month on that money? A good BRRRR calculator therefore needs both halves: the refinance math (how much cash comes out) and the rental math (what the property earns on the new loan).

1. Add up the cash in. Purchase price, purchase closing costs, the rehab and the holding costs while the property is being renovated and rented.
2. Estimate the after-repair value (ARV). The refinance loan is a percentage of the new value, not of what you paid.
3. Apply the refinance loan-to-value. New loan = ARV × LTV. Subtract refinance closing costs to get the cash that actually reaches you.
4. Cash left in the deal = cash in − net refinance proceeds. If that is zero or negative, all your cash has come back.
5. Run the rental numbers on the new loan. Rent minus vacancy and operating costs is NOI; NOI minus the new mortgage payment is cash flow. Divide annual cash flow by the cash left in the deal for cash-on-cash return.

Worked example using the calculator defaults

The calculator loads with a $150,000 purchase, $4,000 purchase closing costs, $40,000 rehab, $6,000 holding costs, a $250,000 ARV, a 75% refinance LTV at 7% over 30 years with $3,500 refinance closing costs, $2,300 monthly rent, 5% vacancy, $2,400 a year property tax, $1,200 a year insurance, and 8% management, 5% maintenance and 5% capex reserves. Rounded to the nearest dollar:

• Total cash in: $150,000 + $4,000 + $40,000 + $6,000 = $200,000.
• Refinance loan: $250,000 × 75% = $187,500. After $3,500 of closing costs, $184,000 comes back to you.
• Cash left in the deal: $200,000 − $184,000 = $16,000. You recovered 92% of your cash.
• New mortgage payment: $187,500 at 7% over 30 years is $1,247/month ($14,969 a year).
• Rent collected: $27,600 less 5% vacancy ($1,380) = $26,220.
• Operating costs: tax $2,400 + insurance $1,200 + 18% of rent collected ($4,720) = $8,320.
• NOI: $26,220 − $8,320 = $17,900.
• Annual cash flow: $17,900 − $14,969 = $2,931, about $244 a month.
• Cash-on-cash on the cash left: $2,931 ÷ $16,000 = 18.32%.
• Equity: ARV $250,000 − new loan $187,500 = $62,500 of equity stays in the property, and your all-in cost is 80% of ARV.

The headline figure is high because only $16,000 remains in the deal. That is the appeal of BRRRR, and also its risk: the percentage depends heavily on the ARV and the refinance terms, which are estimates until the appraisal and lender confirm them.

What if all the cash comes back?

If the refinance proceeds equal or exceed your total cash in, nothing is left in the deal. Cash-on-cash return then divides by zero, which some investors call "infinite". The calculator avoids showing a meaningless number: it shows All cash returned, tells you how much surplus came back, and leaves you to judge the deal on monthly cash flow and the equity you hold. Try an ARV of $290,000 to see it.

Things the BRRRR math can hide

• Appraisal risk. The refinance depends on the appraised value. A lower appraisal means a smaller loan and more cash stuck in the deal.
• Seasoning and lender rules. Many lenders require a waiting period or limit cash-out loan-to-value on investment properties. Terms vary, so confirm with your lender.
• Rate sensitivity. A higher refinance rate raises the payment and can turn a positive cash flow negative. Change the rate field to see how fast.
• Holding costs. Delays are expensive. Interest, insurance and taxes during rehab and lease-up are cash in, so enter them honestly.
• What it leaves out. Income tax, depreciation, selling costs, rent growth and prepayment penalties are not modeled.

For other angles on the same deal see the rental property cash flow calculator, cash-on-cash return calculator and DSCR calculator (many investor refinance loans are underwritten on DSCR).