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BRRRR Method Calculator
Want to build a rental empire with the same $50k over and over? The BRRRR strategy lets you recycle your capital by refinancing forced equity. Let's see if the numbers work—or if you're about to trap $30k in a deal for 5 years.
Acquisition & Rehab
Rental & Refinance
BRRRR Analysis
BRRRR: The Capital Recycling Machine
Traditional rental investing: buy a $150k property, put $30k down, hold forever. After 10 properties you've got $300k tied up. BRRRR flips this: buy distressed, force appreciation via rehab, refinance pulls out your capital. Now you buy property #2 with THE SAME $30k. Rinse, repeat. This is how you build 10-20 units with one chunk of start-up capital.
💡 Real Talk from Marcus Lee, 18-Property BRRRR Investor
My first BRRRR: perfection. Bought a trashed duplex for $85k, spent $25k rehab, total $110k in. Appraised at $165k. Refinanced at 75% LTV = $123,750 loan. Pulled out $113k after closing costs. I made $3k profit AND still owned a $450/month cash-flowing duplex. Infinite return. Used that $113k to buy 2 more. My 7th BRRRR? Disaster. Over-rehabbed ($45k granite & hardwood when renters wanted cheap). Appraised $15k under. Stuck with $22k in the deal for 3 years. Killed my velocity. Don't fall in love with finishes.
The BRRRR Formula
Total Cash Invested = Purchase + Closing + Rehab
Refinance Proceeds = ARV × LTV%
Cash Recovered = Refinance Loan - Total Invested
Cash Left in Deal = Total Invested - Cash Recovered
Example:
- Purchase: $100k
- Closing: $3k
- Rehab: $30k
- Total invested: $133k
- ARV: $175k
- Refinance (75% LTV): $131,250
- Cash recovered: $131k (minus ~$3k refi costs = $128k)
- Cash left in deal: $133k - $128k = $5k
You recycled $128k of your $133k. That $128k buys the next property.
⚠️ Common Mistake: Ignoring the 6-Month Seasoning Rule
Most banks won't do a cash-out refinance until you've owned the property 6-12 months. This is "seasoning"—they want to see you didn't just flip it. Some lenders waive this for portfolio loans or if yo u have strong financials. But plan on 6 months minimum. That means 6 months of holding costs (mortgage, insurance, taxes) BEFORE you can pull cash out. Budget for this or you'll be stuck paying two mortgages while waiting for seasoning.
The 75% Rule (Why It Matters)
Investment property refinances max out at 75-80% LTV. Primary residence? 80-90%. This is THE limiting factor in BRRRR. To pull out 100% of your capital, you need forced appreciation of at least 33%.
Math:
- Total invested: $130k
- To get $130k back at 75% LTV, property must appraise for $173k+
- $173k ÷ $130k = 1.33 → 33% forced appreciation needed
This is why BRRRR only works on DISTRESSED properties. You can't do this on turnkey rentals.
Where to Find 33%+ Discount Properties
Best sources:
- Wholesalers (they find distressed, mark up 10-15%, still below market)
- Direct mail to absentee owners/pre-foreclosure lists
- Probate sales (heirs want quick cash, not max price)
- MLS "fixer uppers" listed way too high for 6+ months (make lowball offers)
- Foreclosure auctions (cash only, high risk but deepest discounts)
Red flags (avoid):
- Foundation issues (too expensive to fix)
- Major mold/water damage (remediation $20k-50k)
- Bad location (no amount of rehab fixes crime/schools)
- Weird layouts (5 bed/1 bath? Hard to rent)
Rehab Budget: Cosmetic Only
BRRRR rehabs should be cosmetic + functional, not luxury. You're rent ing, not selling to retail buyers.
Good spend (high ROI):
- Paint (whole house): $2k-4k
- Flooring (LVP, not hardwood): $3k-6k
- Kitchen update (new cabinets/counters): $5k-10k
- Bathroom refresh: $3k-5k each
- Curb appeal (siding, landscaping): $2k-5k
Waste of money:
- Granite counters (renters destroy them, go quartz composite $40/sq ft)
- Hardwood floors (LVP looks identical, costs half, scratch-proof)
- High-end appliances (buy builder-grade stainless, $1,800 for full set)
- Custom tile work (subway tile is $3/sq ft, custom is $15+)
Your goal: make it clean, modern, functional. Not HGTV-worthy. Renters care about: does it work, is it clean, am I safe here?
💡 Marcus's Refinance Hack: The Pre-Appraisal
Before I buy, I order a pre-appraisal ($350-500). The appraiser tells me: "If you do X, Y, Z improvements, this will appraise for $___." Now I know my ARV isn't wishful thinking—it's a professional estimate. I've walked away from 3 "deals" because pre-appraisal said ARV would only hit $140k when I needed $160k. Saved me from trapping $20k+ in bad deals. Best $500 you'll spend.
Monthly Cash Flow After Refinance
Post-refinance, your new mortgage payment is based on the refinance loan amount. Many BRRRR properties cash flow $100-300/month AFTER pulling out capital. Not huge, but you're getting paid to hold infinite-return properties.
Example:
- Refinance loan: $131k at 7% for 30 years
- P&I payment: $871/month
- Insurance: $100/month
- Property tax: $200/month
- Vacancy (8%): $120/month
- Maintenance (5%): $75/month
- Total expenses: $1,366/month
- Rent: $1,500/month
- Cash flow: $134/month
Not life-changing. But if you have $5k left in the deal, that's $1,608 annual cash flow ÷ $5k = 32% cash-on-cash return. Plus appreciation, principal paydown, tax benefits.
The Infinite Return Scenario
When refinance pulls out 100%+ of your capital, your denominator in "cash-on-cash return" is ZERO. Anything divided by zero = infinity.
Example:
- Invested: $120k
- ARV: $180k
- Refinance (75%): $135k
- After closing costs: $132k cash out
- You made $12k profit + still own the property
- Cash left in deal: $0 (actually -$12k, you profited)
- Monthly cash flow: $200
- Cash-on-cash return: $2,400/year ÷ $0 = ∞%
This is the holy grail. Own a property with zero of your own money in it, making $200/month forever. Now use that $132k to buy properties #2 and #3.
Reviewed by Marcus Lee
BRRRR Investor (18 Properties, $3.2M Portfolio)
Marcus built his entire portfolio on $65k starting capital, recycled 7 times. His advice? Get pre-approvals from 3 lenders before you buy—seasoning rules vary wildly.
Frequently Asked Questions
What is the BRRRR method?
Buy, Rehab, Rent, Refinance, Repeat. You buy a distressed property cheap, fix it up, rent it out, then refinance based on the NEW (higher) value. The refinance pulls out most/all your cash. You use that to buy the next property. Goal: recycle your initial capital infinitely. Instead of buying 1 property with $50k, you buy 3-5 properties by reusing the same $50k.
How do you get infinite returns with BRRRR?
If refinance pulls out 100%+ of your invested capital, you have $0 left in the deal but still own a cash-flowing property. Example: Invest $60k total, refinance pulls out $65k. You have $5k MORE than you started with, plus a rental making $300/month. Infinite cash-on-cash return (profit ÷ $0 invested = infinity). This only works if you buy at deep discount and add forced appreciation through rehab.
What's the biggest risk of BRRRR?
Overpaying or over-rehabbing. If property appraises for less than you expected, your refinance doesn't pull out enough cash. Now your capital is stuck. Example: Buy for $120k, spend $40k rehab, total $160k invested. Appraisal comes in at $180k (you hoped for $200k). At 75% LTV, you get $135k refinance. You're stuck with $25k in the deal. That kills velocity. Always get a pre-appraisal before buying.
Do banks actually allow BRRRR financing?
Yes, but with rules. Most lenders require: 1) Property seasoning—6-12 months of ownership before cash-out refinance, 2) Proof of rental income (leases), 3) Max 75-80% LTV on investment properties, 4) Good credit (680+), 5) Reserves (6 months PITI in bank). Some portfolio lenders/credit unions waive seasoning. Shop around. DSCR loans (Debt Service Coverage Ratio) are BRRRR-friendly—no income verification, just rental income vs payment.