BRRRR Calculator Formula
Understand the math behind the brrrr calculator. Each variable explained with a worked example.
Formulas Used
Cash Left in Deal
money_left_in = cash_left_inCash Recovered at Refinance
cash_recovered = cash_out% of Investment Recovered
pct_recovered = total_cash_in > 0 ? cash_out / total_cash_in * 100 : 0Monthly Cash Flow
monthly_cf = monthly_cash_flowCash-on-Cash Return
cash_on_cash = cash_left_in > 0 ? annual_cash_flow / cash_left_in * 100 : 0New Mortgage Payment
new_mortgage_pmt = mortgage_paymentVariables
| Variable | Description | Default |
|---|---|---|
purchase_price | Purchase Price(USD) | 150000 |
rehab_cost | Rehab Cost(USD) | 40000 |
closing_costs_buy | Purchase Closing Costs(USD) | 5000 |
arv | After Repair Value(USD) | 250000 |
refi_ltv | Refinance LTV(%) | 75 |
refi_rate | Refinance Interest Rate(%) | 7 |
refi_term_years | Refinance Loan Term(years) | 30 |
refi_closing_costs | Refinance Closing Costs(USD) | 4000 |
monthly_rent | Monthly Rent(USD) | 2000 |
monthly_expenses | Monthly Operating Expenses(USD) | 600 |
total_cash_in | Derived value= purchase_price + rehab_cost + closing_costs_buy | calculated |
refi_loan_amount | Derived value= arv * refi_ltv / 100 | calculated |
cash_out | Derived value= refi_loan_amount - refi_closing_costs | calculated |
cash_left_in | Derived value= total_cash_in - cash_out | calculated |
r | Derived value= refi_rate / 100 / 12 | calculated |
n | Derived value= refi_term_years * 12 | calculated |
mortgage_payment | Derived value= r > 0 ? refi_loan_amount * r * pow(1 + r, n) / (pow(1 + r, n) - 1) : refi_loan_amount / n | calculated |
monthly_cash_flow | Derived value= monthly_rent - monthly_expenses - mortgage_payment | calculated |
annual_cash_flow | Derived value= monthly_cash_flow * 12 | calculated |
How It Works
The BRRRR Strategy
BRRRR stands for Buy, Rehab, Rent, Refinance, Repeat. The goal is to recover most or all of your initial investment through refinancing, then repeat with the same capital.
How BRRRR Works
1. Buy a property below market value 2. Rehab to increase value and make rent-ready 3. Rent to a tenant at market rates 4. Refinance based on the new appraised value (ARV) 5. Repeat using the recovered capital
Key Metrics
Refinance Requirements
Worked Example
Buy at $150,000, rehab $40,000, closing $5,000. ARV $250,000, refi at 75% LTV, 7% rate, 30 years, $4,000 refi closing. Rent $2,000/mo, expenses $600/mo.
- 01Total cash in: $150,000 + $40,000 + $5,000 = $195,000
- 02Refi loan: $250,000 x 75% = $187,500
- 03Cash recovered: $187,500 - $4,000 = $183,500
- 04Cash left in deal: $195,000 - $183,500 = $11,500
- 05% recovered: $183,500 / $195,000 = 94.1%
- 06Mortgage payment: $187,500 at 7% for 30yr = $1,247.73
- 07Monthly cash flow: $2,000 - $600 - $1,247.73 = $152.27
- 08Annual cash flow: $152.27 x 12 = $1,827
- 09Cash-on-cash return: $1,827 / $11,500 = 15.9%
Frequently Asked Questions
What happens if the appraisal comes in lower than ARV?
A lower appraisal means a smaller refinance loan and more cash left in the deal. You can appeal the appraisal with comparable sales data, wait for market appreciation, or accept the higher cash-in-deal. Conservative ARV estimates prevent this problem.
How long do I need to wait before refinancing?
Most lenders require a 6-month seasoning period from the purchase date. Some portfolio lenders or credit unions may refinance sooner. During this period, complete rehab and stabilize the property with a tenant.
What if I recover more than I invested?
Recovering more than 100% is the ideal BRRRR outcome, meaning you end up with a cash-flowing rental and extra cash to invest in the next deal. This happens when the purchase price plus rehab is well below the refi loan amount.
Ready to run the numbers?
Open BRRRR Calculator