BRRRR Calculator: How Much Capital Actually Comes Back Out

Introduction

BRRRR is not a cash-flow strategy. It is a capital-recycling strategy that happens to leave you holding a rental. So the number that decides whether it worked is not cash flow — it is how much of your money came back out at the refinance.

TL;DR: The whole strategy turns on one figure you do not control: the appraised after-repair value. On the defaults here, a $10,000 appraisal miss moves cash left in the deal by $7,500. Get all-in costs under about 75% of ARV and the refinance returns nearly everything; miss by a little and capital is stranded in a property you now have to hold.

The five steps, and where each one costs money

Buy below market, usually with a bridge or hard money loan that lends against the purchase price. Rehab to raise the value. Rent it to stabilise the income. Refinance into permanent debt sized against the new value. Repeat with the capital that came back.

The arithmetic that matters spans steps 1 and 4:

All-in cost   = purchase + rehab
                + closing + holding
                + bridge interest
                + bridge points

Cash invested = all-in cost
                − bridge loan

Refi loan     = ARV × refinance LTV

Cash returned = refi loan
                − bridge payoff
                − refi closing costs

Cash left in  = cash invested
                − cash returned

Note that bridge interest, points and holding costs are all basis, not overhead. They are real dollars in the deal that the refinance has to give back, and leaving them out of the all-in figure is the most common way a BRRRR model flatters itself.

Worked example

The calculator's defaults: buy at $145,000, put $50,000 into it, $4,000 closing, six months to refinance at $500 a month of holding costs. Bridge lender advances 80% of purchase at 11% with 2 points. ARV $280,000, refinancing at 75% LTV and 7.5% over 30 years with $5,000 of closing costs. Rents for $2,650 with operating expenses at 40%.

Going in:

• Bridge loan: $145,000 × 80% = $116,000
• Bridge cost: interest on $116,000 for six months at 11% ($6,380) plus 2 points ($2,320) = $8,700
• Holding: $500 × 6 = $3,000
• All-in cost: $145,000 + $50,000 + $4,000 + $3,000 + $8,700 = $210,700
• All-in as a share of ARV: 210,700 ÷ 280,000 = 75.3%
• Cash invested: $210,700 − $116,000 = $94,700

Coming out:

• New loan: $280,000 × 75% = $210,000
• Cash returned: $210,000 − $116,000 payoff − $5,000 closing = $89,000
• Cash left in the deal: $94,700 − $89,000 = $5,700

You put in $94,700 and got $89,000 back. $5,700 remains in a property now worth $280,000 against $210,000 of debt — $69,300 of equity created, and $122 a month of cash flow.

Cash-on-cash on the $5,700 still in the deal is 25.6%. That number is the reason people run this strategy.

Why the appraisal is the whole risk

Everything above is arithmetic except one input. The ARV is an opinion a third party will give you months after you commit, and cash left in the deal moves by 75 cents for every dollar the appraisal moves — because the refinance lends 75% of it.

On the same deal:

Appraised ARV	Cash left in the deal
$300,000	−$9,300 (all capital back, plus $9,300)
$290,000	−$1,800 (all capital back)
$280,000	$5,700
$270,000	$13,200
$260,000	$20,700

A $20,000 miss on a $280,000 valuation — 7%, well inside normal appraisal variance — turns $5,700 stranded into $20,700 stranded. That is not a small deal getting slightly worse; it is most of your next down payment disappearing.

Two practical consequences. First, be conservative on ARV, and use closed comparable sales rather than active listings. Second, know your lender's seasoning requirement before you start: many will not lend against improved value until you have owned the property for six months, which sets the real minimum timeline regardless of how fast the rehab goes.

Why cash-on-cash is undefined, not infinite

When the refinance returns every dollar, you will see people describe the return as "infinite." This calculator reports it as undefined instead, and the distinction matters.

Cash-on-cash is a ratio: annual cash flow divided by capital invested. With zero capital invested, there is no denominator — the ratio does not exist. Calling it infinite invites you to compare it against a percentage, which is meaningless, and it hides the fact that a deal with no capital in it and $50 a month of cash flow is worse than one with $10,000 in it and $400 a month.

When capital is fully recovered, judge the deal on the cash flow, the DSCR, and the equity created. Not on a ratio with nothing in the bottom.

The 75% rule and why it exists

The target you will hear repeated is to keep all-in costs at or below 75% of ARV. That is not a rule about deal quality — it is arithmetic about the refinance. If your permanent lender will lend 75% of ARV and your all-in cost is 75% of ARV, the loan exactly covers what you spent, minus closing costs.

Which means the rule is really about your lender's LTV. At 70% LTV the target is 70%. At 80% it is 80%. Check the LTV you can actually get before adopting anyone's rule of thumb — and note that DSCR-based cash-out refinances often cap lower than the rate-and-term equivalents.

For the refinance itself, run the DSCR calculator: the permanent loan has to pass the lender's coverage test at the rent you actually achieve, and on this example the DSCR is 1.08 — financeable, but not comfortably.

Where this calculator is deliberately simple

The bridge loan is interest-only on the purchase advance. Most are. If yours also funds rehab in draws, see the hard money calculator for how draw schedules change the interest.

No rent during the rehab. The property is vacant while you renovate, which is why holding costs are a separate line.

One refinance, no seasoning delay modelled. If your lender requires six months and your rehab takes three, you carry the bridge for six — set months-to-refinance accordingly rather than to your construction timeline.

Operating expenses are a single percentage. For a line-by-line breakdown of what that 40% is made of, use the rental ROI calculator.

FAQ

What is a good BRRRR deal?

All-in costs at or below your refinance lender's LTV as a share of ARV — commonly 75% — with positive cash flow after the refinance and a DSCR the lender will accept. If all three hold, the capital recycles and you keep an asset. If all-in creeps to 85% of ARV, you have bought a rental with a lot of your own money in it, which is a fine outcome but not BRRRR.

How much cash do I need to start a BRRRR?

More than the final "cash left in" figure suggests, because you need the full cash-invested amount up front and only get it back months later. On the example above that is $94,700 out of pocket for roughly six months, to end up with $5,700 in the deal. Plan for the peak requirement, not the net.

What if the appraisal comes in low?

Your options are to accept more cash left in the deal, bring the loan amount down and keep more equity, contest the appraisal with better comparables, or wait and re-appraise later after further market movement. None of them are free, which is why conservative ARV estimates at the offer stage are worth more than any of them.

Does BRRRR still work at current interest rates?

It works where the spread between purchase price plus rehab and after-repair value is wide enough — which is a market question, not a rate question. What rates change is the refinance test: at 7.5%, a $210,000 loan needs about $1,468 a month of debt service, so the property needs roughly $2,450 of rent at 40% expenses just to break even. In markets where rent is below about 0.9% of ARV monthly, the maths stops working regardless of how good the purchase was.

Can I BRRRR with a conventional loan instead of hard money?

Sometimes, if the property is habitable enough to finance and you can close on the timeline the seller wants. The reason hard money dominates the strategy is speed and the willingness to lend on a house with no kitchen, not the rate. If a conventional lender will fund the purchase, the deal gets meaningfully cheaper — set the bridge rate and points to your actual terms.

Should I refinance into a DSCR loan or a conventional one?

Conventional is cheaper if you qualify and have not used up your allowed number of financed properties. DSCR is faster, does not care about your tax returns, and has no limit on property count — at a rate premium. Since BRRRR is a repeat strategy, the property-count limit is often what pushes investors to DSCR by the fourth or fifth deal.

Conclusion

Model the appraisal you are afraid of, not the one you are hoping for. Run the calculator at 90% of your ARV estimate and see whether the deal still recycles your capital. If it does, you have a BRRRR. If it only works at your optimistic number, you have a rental purchase with extra steps and a hard money bill.