BRRRR Calculator for Rental Property
Analyze Buy, Rehab, Rent, Refinance, Repeat strategy returns for real estate investing. Calculate cash-on-cash return, cash flow, and capital recovery.
BRRRR Calculator for Rental Property
Calculator
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Formula: Cash-on-Cash Return = Annual Cash Flow / Cash Left in Deal x 100
Worked example — Cash Left: $8,100 | Cash Flow: $258/mo | CoC Return: 38.2%
Formula
Cash-on-Cash Return = Annual Cash Flow / Cash Left in Deal x 100
Where Annual Cash Flow = (Monthly Rent x (1 - Vacancy)) - Mortgage Payment - Expenses) x 12. Cash Left in Deal = Total Investment - Refinance Cash Out. The goal is to minimize cash left while maximizing cash flow.
Worked Examples
Example 1: Successful Full Capital Recovery
Problem:Buy a distressed duplex for $120,000, spend $30,000 on rehab. ARV is $200,000. Rent for $1,800/month. Refinance at 75% LTV with 7% rate.
Solution:Total cash in = $120,000 + $30,000 + $3,600 closing = $153,600 Refinance loan = $200,000 x 75% = $150,000 Cash out after refi closing = $150,000 - $4,500 = $145,500 Cash left in deal = $153,600 - $145,500 = $8,100 Mortgage payment = $998/mo Cash flow = $1,656 (rent after vacancy) - $998 - $400 = $258/mo
Result:Cash Left: $8,100 | Cash Flow: $258/mo | CoC Return: 38.2%
Example 2: No Money Left in Deal
Problem:Purchase for $80,000, rehab $20,000, ARV $160,000, rent $1,400/month, refinance at 75% LTV, 7% rate.
Solution:Total cash in = $80,000 + $20,000 + $2,400 = $102,400 Refinance loan = $160,000 x 75% = $120,000 Cash out = $120,000 - $3,600 = $116,400 Cash left = $102,400 - $116,400 = -$14,000 (profit!) Mortgage = $798/mo Cash flow = $1,288 - $798 - $350 = $140/mo
Result:Full Recovery + $14K profit | Cash Flow: $140/mo | Infinite CoC!
Frequently Asked Questions
What is the BRRRR strategy in real estate investing?
BRRRR stands for Buy, Rehab, Rent, Refinance, Repeat and is a popular real estate investment strategy for building a rental portfolio with limited capital. The process starts by purchasing a distressed property below market value, then renovating it to increase its value (forced appreciation). Once rehabbed, you place a tenant and collect rent to create positive cash flow. After a seasoning period, typically six to twelve months, you refinance based on the new higher appraised value through a cash-out refinance. If executed correctly, you recover most or all of your original investment capital, which you then use to repeat the process on another property. This strategy allows investors to accumulate multiple rental properties while recycling the same initial capital pool.
How do you calculate cash-on-cash return for BRRRR?
Cash-on-cash return measures the annual pre-tax cash flow relative to the actual cash you have invested in the deal. After a BRRRR refinance, your cash left in the deal is your total initial investment minus the cash received from the refinance. The formula is: Cash-on-Cash Return equals Annual Cash Flow divided by Cash Left in Deal, multiplied by 100. If you invested $155,000 total and received $147,000 back from the refinance, you have $8,000 left in the deal. If the property generates $3,600 annual cash flow, your cash-on-cash return is 45 percent. In a perfect BRRRR deal where you recover all your capital, the cash-on-cash return is technically infinite because your denominator approaches zero, meaning you are earning returns on none of your own money.
What is a good after-repair value for a BRRRR deal?
For a successful BRRRR deal, most investors target an all-in cost (purchase plus rehab plus closing costs) at or below 70 to 75 percent of the after-repair value (ARV). This is often called the 70 percent rule or 75 percent rule. If a property has an ARV of $200,000, your total investment should ideally be $140,000 to $150,000 or less. This margin ensures that when you refinance at 75 percent LTV (loan-to-value), the refinance proceeds cover your initial investment. The accuracy of the ARV estimate is critical because it determines your refinance amount. Overestimating ARV is the most common BRRRR mistake. Use recent comparable sales within a half mile radius sold within the last three to six months, and be conservative in your estimates to protect against market fluctuations.
How long do you have to wait to refinance a BRRRR property?
Most lenders require a seasoning period before allowing a cash-out refinance, typically ranging from six to twelve months after purchase or after the property deed is recorded. Conventional lenders through Fannie Mae and Freddie Mac generally require a six-month seasoning period before allowing a cash-out refinance based on a new appraisal. Some portfolio lenders, credit unions, and private lenders may have shorter or no seasoning requirements, though they often charge higher interest rates. During the seasoning period, investors typically fund the purchase and rehab using hard money loans, private money, cash, or home equity lines of credit. These short-term financing costs should be factored into the total deal analysis. The refinance itself takes 30 to 60 days to process after application.
What are the risks of the BRRRR strategy?
The BRRRR strategy carries several significant risks that investors must understand and mitigate. Rehab cost overruns are common, especially for inexperienced investors, and can erode or eliminate projected profits. Unexpected structural, plumbing, or electrical issues discovered during renovation can add thousands to the budget. Appraisal risk is substantial because the entire strategy depends on the property appraising at or above your projected ARV during refinancing. If the appraisal comes in low, you cannot pull out enough capital to recycle. Market timing risk exists because property values can decline between purchase and refinance. Interest rate changes can increase your refinance mortgage payment, reducing or eliminating cash flow. Tenant risk includes vacancies, late payments, and property damage. Finally, the short-term financing used during the rehab phase typically carries high interest rates, so delays in construction or refinancing can significantly increase holding costs.
What is the difference between a cash-out refinance and a rate-and-term refinance in a BRRRR deal?
A rate-and-term refinance simply replaces the existing debt with a new loan at a different rate or term and returns no cash, so it cannot recycle your capital. A cash-out refinance writes a larger loan against the new appraised value and pays you the difference, which is the step that makes BRRRR work. Lenders price cash-out loans more conservatively, typically allowing a lower maximum loan-to-value and charging a slightly higher rate than the rate-and-term equivalent.
How do holding costs during the rehab period affect your all-in basis?
Every month between purchase and the first rented month adds interest on the acquisition loan, property taxes, insurance and utilities, with no offsetting rent. On hard money at a high rate those carry costs run into thousands per month, and they are part of your true all-in basis even though they buy no added value. A rehab that slips from three months to six can quietly move a deal from inside the 75 percent of after-repair value target to outside it.
What is forced appreciation and how does it differ from market appreciation?
Forced appreciation is the increase in value you create directly, by curing deferred maintenance, updating kitchens and baths, adding a bedroom or, on small multifamily, raising rents to market. It is under your control and shows up at the refinance appraisal. Market appreciation is the passive drift in prices across the whole area and is outside your control. BRRRR depends on forced appreciation; a plan that only works if the market rises is speculation, not a strategy.
How does the refinance loan-to-value ratio determine how much capital you recover?
The cash you get back equals the new loan amount, which is the after-repair value multiplied by the lender's maximum loan-to-value, minus any existing loan payoff and refinance closing costs. At a $200,000 after-repair value and 75 percent loan-to-value, the new loan is $150,000. If your all-in cost was $150,000 you recover close to everything before fees; a drop to 70 percent loan-to-value cuts the loan to $140,000 and strands $10,000 in the deal. Small changes in this ratio move the outcome sharply.
How does the 1 percent rule help check whether the property will still cash flow after refinancing?
The 1 percent rule asks whether monthly rent is at least 1 percent of the all-in cost, so $1,500 of rent against a $150,000 basis clears it. It is a screening shortcut, not an analysis: it ignores property taxes, insurance, vacancy, management and capital reserves, and it becomes unreliable when interest rates are high because the same balance carries a much larger payment. Use it to reject deals quickly, then verify with the full cash-flow figures the calculator produces.
References
Reviewed for accuracy by Daniel Agrici, Founder & Lead Developer · Editorial policy
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