How this calculation works
The BRRRR Method Investment Calculator models the Buy, Rehab, Rent, Refinance, Repeat real estate strategy to determine total cash invested, cash returned from bank refinancing, remaining capital left in the deal, and monthly net cash flow.
Mathematical formula and logic
Total Invested = Buy + Rehab. New Loan Amount = ARV × (Refinance LTV / 100). Cash Left in Deal = Total Invested - New Loan. Cash-on-Cash Return = (Annual Net Cash Flow / Cash Left in Deal) × 100.
Worked example
Buying for $120,000 with $35,000 rehab ($155,000 total invested) on a property that appraises at $210,000 ARV: A 75% cash-out refinance returns $157,500, pulling out 100% of your initial capital (+$2,500 surplus cash) for an 'infinite' cash-on-cash return while maintaining positive monthly rental cash flow.
Calculation assumptions
- Bank cash-out refinance requires a 6-month seasoning period.
- Monthly operating expenses (property taxes, insurance, vacancy, maintenance, management) estimated at 35% of gross rent.
Frequently asked questions
What does BRRRR stand for?
BRRRR stands for Buy, Rehab, Rent, Refinance, Repeat—a popular real estate wealth-building strategy for acquiring rental properties with little to no permanent capital left in the deal.
What is a 'Perfect BRRRR' (Infinite Return)?
A 'Perfect BRRRR' occurs when the new cash-out refinance loan covers 100% of your original purchase price, closing fees, and renovation costs, allowing you to recover all your original capital while retaining an income-producing asset.
What is a bank seasoning period?
Most conventional mortgage lenders require a 6-month 'seasoning period' of ownership before allowing a cash-out refinance based on the new appraised ARV rather than the original purchase price.
What is the 50% Rule in rental property expenses?
The 50% Rule is a quick guideline estimating that ~50% of gross rental income will be consumed by non-mortgage operating expenses (taxes, insurance, maintenance, property management, vacancy).
What are the biggest risks in a BRRRR deal?
The primary risks are: 1) Appraising lower than projected ARV, leaving substantial capital trapped in the property, 2) Renovation cost overruns, and 3) Interest rate spikes during the rehab phase.