BRRRR Strategy Calculator
Analyze the potential returns of your Buy, Rehab, Rent, Refinance, Repeat real estate investment strategy.
Deal Details
Investment Analysis
What is the BRRRR Strategy?
The BRRRR Strategy Calculator helps real estate investors analyze the profitability of the "Buy, Rehab, Rent, Refinance, Repeat" method. This powerful strategy allows investors to build a portfolio of rental properties with little to no capital left in each deal.
The 5 steps are:
- Buy - Purchase a distressed property below market value.
- Rehab - Renovate the property to increase its value (force appreciation).
- Rent - Find a tenant to generate monthly income. You can estimate returns with our ROI Calculator.
- Refinance - Take out a long-term mortgage based on the new higher value to pay off the original purchase/rehab costs.
- Repeat - Use the recovered capital to buy the next property.
To understand how compound growth works on your investments, check our Compound Interest Calculator. For comparing different loan options, use our Loan & Mortgage Calculator.
How the Calculation Works
This calculator determines your Cash on Cash Return by comparing your annual pre-tax cash flow to the total cash you have left in the deal after refinancing.
It calculates the Refinance Loan Amount based on your ARV and LTV inputs. It then subtracts the original purchase price, rehab costs, and closing costs to find your Cash Returned.
If your Cash Returned equals or exceeds your Total Investment, you have achieved an Infinite Return—the ultimate goal of the BRRRR strategy.
Key Metrics Explained
Cash on Cash Return
The annual pre-tax cash flow divided by the total cash invested. This is the primary metric for BRRRR success.
Infinite Return
Achieved when you refinance out 100% (or more) of your initial investment. You have $0 left in the deal but still own it.
ARV (After Repair Value)
The estimated value of the property after all renovations are complete. This determines your refinance amount.
Seasoning Period
The time banks require you to own a property before they will refinance it based on the appraised value (usually 6 months).
Benefits of BRRRR
- High Returns: By forcing appreciation through rehab, you can achieve significantly higher returns than turnkey rentals.
- Capital Velocity: You can recycle the same capital multiple times to buy multiple properties.
- Equity Growth: You capture immediate equity margin between your all-in cost and the ARV.
- Tax Advantages: The cash-out refinance proceeds are typically tax-free debt, not taxable income.
How to Use This Calculator
Enter Costs
Input purchase price, rehab costs, and closing costs.
Estimate Value
Enter the After Repair Value (ARV) and expected rent.
Set Loan Terms
Input the refinance LTV, interest rate, and term.
Analyze
Review the Cash on Cash return and money left in the deal.
Factors Affecting Results
1. The 70% Rule
A common rule of thumb: Do not pay more than 70% of the ARV minus repairs. This leaves room for profit and refinancing.
2. Accurate Rehab Estimates
Underestimating repair costs is the #1 killer of BRRRR deals. Always add a contingency budget (e.g., 10-15%).
3. Appraisal Risk
If the appraisal comes in low, you won't be able to pull as much cash out, leaving more of your money stuck in the property.
Frequently Asked Questions (FAQ)
Q: What is the BRRRR strategy?
A: BRRRR stands for Buy, Rehab, Rent, Refinance, Repeat. It's a real estate investment strategy where you buy a distressed property, fix it up, rent it out, refinance it to pull your capital back out, and then use that capital to buy another property.
Q: What is a good Cash on Cash return for BRRRR?
A: A good Cash on Cash return varies by investor, but many target 10-12% or higher. The 'infinite' return is the holy grail, achieved when you pull all your initial investment back out during the refinance.
Q: How does the refinance step work?
A: After rehabbing and renting the property, you apply for a cash-out refinance based on the new appraised value (ARV). The lender typically gives you 70-75% of the ARV, which you use to pay off the original purchase loan and recoup your rehab costs.
Q: What is ARV?
A: ARV stands for After Repair Value. It is the estimated market value of the property after all renovations are completed.
Q: What are the risks of BRRRR?
A: Risks include rehab costs going over budget, the appraisal coming in lower than expected (leaving money stuck in the deal), and not finding a tenant quickly (vacancy).