BRRRR Calculator
Calculate total capital trapped, refinance cash recovery, post-refinance monthly cash flow, and cash-on-cash ROI.
BRRRR Parameters
Total Out-of-Pocket
$75,200
Down + Closing + Rehab + Holding
Refinance Cash Back
$47,550
Net payout after loan payoff & costs
Capital Trapped
$27,650
Remaining capital in the deal
Monthly Cash Flow
-$193.70/mo
Annual Cash Flow: -$2,324
Cash-on-Cash ROI
-8.4%
Annual Cash Flow
-$2,324
Capital Recovery Waterfall
Shows how much capital you invested, recovered through refinance, and have trapped in the deal.
The 5 Phases of BRRRR
BRRRR — Buy, Rehab, Rent, Refinance, Repeat — is a real estate investment strategy that lets you recycle your capital across multiple properties. The goal is to buy a distressed property, renovate it to increase its value, rent it out for monthly cash flow, refinance based on the new appraised value to pull your initial capital back out, and then repeat the process with the recovered funds on the next deal.
1. Buy
Purchase a distressed or undervalued property, typically at a discount. You'll need a down payment plus closing costs. Many investors use hard money loans or private lenders for the initial purchase since traditional banks rarely finance properties in poor condition.
2. Rehab
Renovate the property to increase its value and make it rent-ready. The rehab budget should be planned carefully — every dollar spent should increase the After Repair Value (ARV) by more than a dollar. During rehab, you also pay holding costs (utilities, taxes, insurance, loan interest) for the months the property sits vacant.
3. Rent
Once renovations are complete, find tenants and start generating rental income. The property should now appraise higher than your total investment. You need reliable tenants because the rental income will determine whether the property cash flows after refinancing.
4. Refinance
Refinance the property with a conventional mortgage based on the new appraised value (ARV). Most lenders offer 70-75% LTV on investment properties. If the new loan is large enough, you can pay off the original loan and recover all or most of your initial capital. This is the key step that makes BRRRR powerful — you pull your money out while keeping the property.
5. Repeat
Use the capital recovered from the refinance to fund your next BRRRR deal. This lets you build a portfolio without needing new capital for each property. Over time, you accumulate cash-flowing properties while recycling the same initial investment.
Seasoning Periods and Why They Matter
Most lenders require a seasoning period — typically 6 to 12 months — between when you purchase the property and when you can refinance. During this time, you must own the property and often have it rented. The lender wants to see that the property performs as a rental before approving a cash-out refinance based on the new appraised value. Some lenders allow seasoning as short as 1 day (no-seasoning loans), but these typically offer lower LTV and higher rates.
Refinancing Risks and What Can Go Wrong
ARV Comes In Low
If the property appraises below your projected ARV, your refinance loan will be smaller. You may not recover all your capital, leaving some trapped in the deal. Always be conservative with ARV estimates and get comparable sales data before purchasing.
Rehab Overruns
Rehab budgets frequently exceed estimates, especially with distressed properties. Hidden issues like foundation problems, mold, or outdated electrical can add thousands. Budget a 15-20% contingency on top of your rehab estimate.
Refinance Rates Rise
Interest rates can increase between purchase and refinance. Higher rates mean higher monthly payments, which reduce or eliminate your cash flow. Stress-test your deal at rates 1-2% above your initial estimate.
Vacancy During Holding
If the property sits vacant longer than expected after rehab, your holding costs pile up and eat into your capital. Have tenants lined up before rehab is complete, and budget for at least 2 months of vacancy.