BRRRR Calculator Guide
The BRRRR strategy (Buy, Rehab, Rent, Refinance, Repeat) allows investors to recycle their capital by refinancing after renovations, potentially getting all their money back while keeping the property.
What is BRRRR?
BRRRR is a powerful real estate investment strategy with five steps:
- Buy - Purchase a distressed property below market value
- Rehab - Renovate to increase property value
- Rent - Find tenants and stabilize income
- Refinance - Cash-out refinance based on new value (ARV)
- Repeat - Use recovered capital for the next deal
The goal is to pull out all (or most) of your invested capital at refinance while keeping a cash-flowing rental property.
Key Input Fields
Purchase Details
| Field | Description | Tips |
|---|---|---|
| Purchase Price | What you're paying for the property | Should be well below ARV |
| ARV (After Repair Value) | Property value after renovations | Get 3+ comps to verify |
| Rehab Cost | Total renovation budget | Include contingency |
| Soft Costs % | Holding costs, closing, points (as % of ARV) | Typically 8-15% |
Refinance Terms
| Field | Description | Typical Values |
|---|---|---|
| LTV % | Loan-to-Value ratio for refinance | 70-80% |
| Refi Rate | Interest rate on new loan | Current market rates |
| Loan Term | Length of refinanced mortgage | 30 years typical |
Operating Expenses
| Field | Description | Guidelines |
|---|---|---|
| Expected Rent | Monthly rental income | Research local comps |
| Annual Taxes | Property tax (annual) | Check county records |
| Monthly Insurance | Landlord policy cost | Get quotes |
| CapEx Reserve % | Capital expenditure reserve | 5-10% of rent |
| Vacancy % | Expected vacancy rate | 5-8% typical |
| Management % | Property management fee | 8-10% if outsourcing |
Understanding Results
Cash Out Analysis
These metrics tell you how much capital you'll have in the deal:
- Max Refi Amount: ARV × LTV% (how much you can borrow)
- Soft Costs: ARV × Soft Cost % (closing costs, holding costs, points)
- Total Costs: Rehab + Soft Costs
- MAO (Maximum Allowable Offer): Max Refi Amount - Total Costs (most you should pay)
- Money Left in Deal: Purchase Price - MAO (capital trapped after refi)
- BRRRR Benefit: How much you save vs. buying at ARV with 25% down
Cash Flow Analysis
Monthly and annual income projections:
- PITI: Principal + Interest + Taxes + Insurance (monthly payment)
- Monthly Cash Flow: Rent - PITI - CapEx - Vacancy - Management
- Annual Cash Flow: Monthly flow × 12
- Cash-on-Cash Return: (Annual Flow ÷ Money Left in Deal) × 100
Key Ratios
- DSCR (Debt Service Coverage Ratio): NOI ÷ Debt Service
- Lenders typically require 1.20-1.25 minimum
- Higher is better (more cushion for vacancies)
The 75% Rule for BRRRR
A common rule of thumb: Your all-in cost should be ≤75% of ARV to get all your money back:
Purchase + Rehab + Holding Costs ≤ 75% of ARV
This leaves room for the 75% LTV refinance to cover your investment.
Deal Quality Ratings
reSniper automatically rates your BRRRR deal:
🟢 Great Deal
- Get all money back at refinance (or cash back!)
- Monthly cash flow ≥ $200
- DSCR ≥ 1.25
🟡 Good Deal
- ≤ $20,000 left in deal
- Monthly cash flow ≥ $100
- DSCR ≥ 1.10
🟠 Marginal Deal
- Some money left in deal
- Positive cash flow
- DSCR ≥ 1.00
🔴 Pass
- Negative cash flow, OR
- DSCR below 1.00
Example Deal Analysis
Let's analyze a sample BRRRR deal:
Property: 3BR/2BA single-family home
| Input | Value |
|---|---|
| Purchase Price | $120,000 |
| ARV | $200,000 |
| Rehab Cost | $35,000 |
| Soft Costs | 10% |
| LTV | 75% |
| Expected Rent | $1,600/mo |
| Interest Rate | 7.5% |
Results:
- Max Refi: $200,000 × 75% = $150,000
- Soft Costs: $200,000 × 10% = $20,000
- Total Costs: $35,000 + $20,000 = $55,000
- MAO: $150,000 - $55,000 = $95,000
- Money Left: $120,000 - $95,000 = $25,000
At $120,000 purchase, you'd leave $25,000 in the deal. Negotiate down to $95,000 (the MAO) to get all your money back!
Tips for BRRRR Success
- Be conservative with ARV - Overestimating ARV is the #1 mistake
- Verify rent before buying - Cash flow makes or breaks BRRRR
- Build in rehab contingency - Add 10-20% buffer for surprises
- Factor in seasoning - Some lenders require 6-12 month ownership before refi
- Build lender relationships - Portfolio lenders often have better BRRRR terms
Related Guides
- Your First Deal
- Glossary - Learn terms like MAO, ARV, DSCR
- Deal Pipeline - Track your BRRRR deals