BRRRR Strategy Calculator
Model the equity pulled out and cash flow generated by a BRRRR real estate deal. Ideal for investors evaluating whether a distressed property is worth buying and rehabbing.
About this calculator
The BRRRR strategy — Buy, Rehab, Rent, Refinance, Repeat — is evaluated by measuring how much capital you recycle out of a deal. The core formula estimates net capital recovered and stabilized annual income: Result = (ARV × Refinance LTV − (Purchase Price + Rehab Costs)) + (Monthly Rent × 12 × 0.15). The first term measures equity pulled out at refinance: if the refinanced loan exceeds your total acquisition and rehab costs, you recover capital to redeploy. The second term approximates net annual cash flow by applying a 15% net operating margin to gross rents — a simplified proxy for income after vacancy, expenses, and debt service. A positive result signals an efficient deal where you recycle capital while retaining a cash-flowing asset.
How to use
You buy a distressed house for $80,000 and spend $40,000 on rehab, for a total all-in cost of $120,000. After repairs the ARV is $180,000. A lender agrees to refinance at 75% LTV: $180,000 × 0.75 = $135,000. Capital recovered = $135,000 − $120,000 = $15,000. Monthly rent is $1,500, so the cash flow component = $1,500 × 12 × 0.15 = $2,700/year. Total result = $15,000 + $2,700 = $17,700. You pulled $15,000 back out to fund the next deal while keeping a property generating roughly $225/month in net cash flow.
Frequently asked questions
What is the BRRRR strategy in real estate investing?
BRRRR stands for Buy, Rehab, Rent, Refinance, Repeat. Investors purchase distressed properties below market value, renovate them to increase value (ARV), place tenants to generate rental income, then execute a cash-out refinance based on the new appraised value. The loan proceeds replenish the investor's capital, which is then used to purchase the next property. The goal is to build a portfolio with minimal net capital left in each deal, maximizing return on invested capital.
How does after repair value affect the success of a BRRRR deal?
After Repair Value (ARV) is arguably the most important number in a BRRRR deal because it determines how much a lender will lend at refinance. A higher ARV relative to your total acquisition and rehab costs means more capital returned and potentially a 'infinite return' scenario where you pull out more than you put in. Conservative ARV estimates are critical — overstating ARV is the most common mistake new BRRRR investors make, leading to deals where capital is trapped and unavailable for the next purchase.
What refinance LTV should I use when analyzing a BRRRR deal?
Most conventional lenders cap cash-out refinances on investment properties at 70%–75% LTV. Some portfolio lenders and DSCR loan programs may go up to 80%, but they typically charge higher rates. Using 70% as a conservative assumption protects your analysis from appraisal shortfalls. The refinance LTV directly determines how much equity you can pull out: the higher the LTV, the more capital you recycle, but also the larger the debt load on the property and the lower your monthly cash flow after debt service.