Buy & Rehab
Refinance
Rent
Taxes, insurance, maintenance, vacancy
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Introduction
The BRRRR method only works if the numbers are run in reverse — starting from the after-repair value and working backward to determine the maximum purchase price. Most failed BRRRR deals share the same autopsy: the investor paid market price for a distressed property, underestimated rehab costs, and then discovered the lender's appraised ARV fell short of projections, leaving tens of thousands in trapped equity they cannot refinance out. According to BiggerPockets' 2024 Real Estate Investor Survey, overestimating ARV and underestimating rehab costs are the top two reasons BRRRR deals underperform. This calculator models total cash invested, refinance proceeds at your target LTV, cash left in the deal, and cash-on-cash return so you know whether a property actually qualifies as a BRRRR before you sign a purchase contract.
What This Calculator Does
This BRRRR strategy calculator analyzes the Buy, Rehab, Rent, Refinance, Repeat method by computing total cash invested (purchase price plus rehab plus closing costs), cash-out refinance proceeds at your target loan-to-value, cash left in the deal after the refinance, monthly and annual cash flow after the new mortgage payment, and cash-on-cash return on remaining equity. It also flags whether the deal achieves full capital recycling — pulling out 100% or more of invested cash — or partial recycling with remaining skin in the game.
The Formula
Total cash invested is the sum of the purchase price, all rehab costs, and acquisition closing costs. The refinance loan amount equals the ARV multiplied by the lender's LTV (typically 70% to 75% for investment properties in 2026). Refinance closing costs (typically 2% to 3% of the new loan) are deducted from proceeds. Cash left in the deal is total investment minus net refinance proceeds. Cash-on-cash return divides annual net cash flow by remaining invested capital.
Step-by-Step Example
Calculate total cash invested
Purchase price $165,000 + rehab $38,000 + acquisition closing costs $4,200 = $207,200 total cash invested at deal entry.
Determine after-repair value from comps
Pull closed sales of renovated 3-bedroom comps within 0.5 miles from the past 90 days. Conservative ARV: $275,000. Do not use active listing prices — use closed sale data only.
Calculate refinance proceeds
At 75% LTV: $275,000 x 75% = $206,250 loan amount. Minus 2.5% refinance closing costs ($5,156) = $201,094 cash-out proceeds. Cash left in deal: $207,200 - $201,094 = $6,106.
Calculate cash-on-cash return
Monthly rent $1,950 minus new mortgage payment at 7.25% / 30 years = $1,407, minus $350 expenses = $193/month or $2,316/year. Cash-on-cash on $6,106 remaining equity = 37.9%.
Real-World Use Cases
Pre-Offer Deal Screening
Before making an offer on a distressed property listed at $145,000, an investor runs the BRRRR model with $45,000 estimated rehab and a $260,000 conservative ARV. The deal leaves $8,200 in equity after refinance with a 28% cash-on-cash return — passing minimum thresholds and justifying further due diligence.
Rehab Budget Sensitivity Analysis
An investor with a $200,000 ARV property tests different rehab scenarios. At $30,000 rehab the deal achieves full capital recycling; at $45,000 it leaves $22,000 in the deal at 14% CoC; at $55,000 the deal no longer qualifies. The model identifies the maximum rehab budget before the strategy breaks.
Lender LTV Comparison
An investor compares two refinance lenders: one offering 70% LTV and one offering 75% LTV. On a $250,000 ARV property, the 5% difference is $12,500 in additional cash recovered — enough to fund the next acquisition's down payment.
Comparison
| ARV | LTV | Rehab Cost | Total Invested | Cash Left In Deal | CoC Return |
|---|---|---|---|---|---|
| $250,000 | 75% | $35,000 | $195,000 | $8,500 | 22% |
| $250,000 | 70% | $35,000 | $195,000 | $20,000 | 9% |
| $275,000 | 75% | $40,000 | $210,000 | $6,000 | 38% |
| $230,000 | 75% | $40,000 | $210,000 | $35,250 | 6% |
| $300,000 | 75% | $50,000 | $225,000 | $0 | Infinite |
Common Mistakes to Avoid
Overestimating ARV using active listings rather than closed sales. Sellers set asking prices — buyers set actual market values. Always pull comps from closed sales within the past 90 days and within 0.5 miles of the subject property.
Not budgeting a 15% to 20% rehab contingency. Contractors miss scopes on plumbing rough-ins, electrical panel upgrades, and permit requirements routinely. A $35,000 bid that runs $42,000 can turn a full capital recycling deal into one with $25,000 permanently tied up.
Forgetting the seasoning requirement. Most conventional lenders and DSCR programs require 6 to 12 months of ownership before allowing a cash-out refinance at the new appraised value. Plan your cash reserves to carry the property through that full seasoning period.
Ignoring ongoing operating expenses in the cash flow model. After refinancing, the property still needs vacancy reserves, maintenance, insurance, property taxes, and CapEx reserves. A deal that cash flows before those expenses is not a BRRRR — it is a break-even holding strategy.
Frequently Asked Questions
Accuracy and Disclaimer
This calculator provides estimates based on your inputs. Actual results depend on accurate ARV appraisal, contractor bids, lender terms, rental market conditions, and interest rates at the time of refinancing. All projections are illustrative. Consult a licensed real estate appraiser, contractor, and mortgage lender before committing capital to any BRRRR investment.
Conclusion
Set a firm minimum cash-on-cash return threshold before running any deal — most experienced BRRRR investors require at least 10% to 15% on cash left in the deal. Deals that barely pencil at optimistic ARV and rehab estimates will lose money when reality lands. Confirm post-refinance debt service coverage with the Rental Property Cash Flow Calculator, and verify the DSCR against lender minimums if you are using a DSCR loan program for the refinance.
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