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# BRRRR Calculation: How to Run the Numbers Before You Buy
- URL: https://landlordsheet.com/brrrr-calculation/
- Published: 2026-10-16T13:51:33.000Z
- Updated: 2026-10-16T13:53:19.000Z
- Description: All-in cost, ARV, refinance proceeds, cash left in the deal and post-refi cash flow: the five numbers that decide whether a BRRRR works, with a worked example.
- Author: Jon
- Tags: Deal Analysis, Investing

**BRRRR** stands for Buy, Rehab, Rent, Refinance, Repeat. You buy a property that needs work, fix it up, rent it out, then refinance based on its new, higher value to pull some or all of your cash back out, and do it again.

When it works, you end up owning a stabilized rental with little of your own money left in it. When it doesn't, you're stuck with a large chunk of cash trapped in a property that barely cash-flows, sometimes with a short-term loan coming due.

The difference is in a handful of numbers you can calculate before you make an offer.

## The five numbers that matter

1. **All-in cost:** everything you spend to get the property rent-ready.
2. **After-repair value (ARV):** what it will appraise for once the work is done.
3. **Refinance proceeds:** what a lender will lend against the ARV, minus refinance costs.
4. **Cash left in the deal:** all-in cost minus refinance proceeds.
5. **Post-refinance cash flow:** rent minus all expenses and the *new* loan payment.

Let's go through each.

## 1\. All-in cost

Add up everything, not just purchase plus rehab:

- **Purchase price**
- **Purchase closing costs**
- **Rehab budget**, with a contingency line for surprises (older properties hide things behind walls)
- **Holding costs** during rehab and lease-up: loan interest, taxes, insurance, utilities, lawn care
- **Financing costs** on any short-term or hard-money loan: points, fees
- **Leasing costs** to place the first tenant

> All-in cost = purchase + closing + rehab + contingency + holding + financing + leasing

Holding costs are the most commonly underestimated line. Rehabs take longer than planned, and appraisals and refinances take time too.

## 2\. After-repair value (ARV)

ARV is what an appraiser will say the property is worth after the work. Base it on **recent sold comparables** of similar size, style, condition (after your rehab) and location. Not list prices, and not your hopes.

Be conservative. The entire strategy hinges on the appraisal, and you don't control it. If your numbers only work at the top of the comp range, they don't really work.

## 3\. Refinance proceeds

Lenders typically lend a percentage of the appraised value on a cash-out refinance, called **loan-to-value (LTV)**. The maximum LTV, any required waiting ("seasoning") period, and whether they use the appraised value or your cost basis all depend on the lender and loan type. Call lenders *before* you buy and ask.

> New loan = ARV × refinance LTV Net refinance proceeds = new loan − refinance closing costs − payoff of any short-term loan

## 4\. Cash left in the deal

> Cash left in = all-in cost − (new loan − refinance closing costs)

If the result is zero or negative, you got all your money back (a "full BRRRR"). If it's positive, that's the cash still tied up in the property. Neither is automatically good or bad. What matters is the return on whatever stays in.

## 5\. Post-refinance cash flow

The refinance replaces your purchase financing with a new, usually larger, long-term loan. That raises your payment. Run cash flow with the new loan:

> Monthly cash flow = rent − vacancy − repairs − CapEx − management − taxes − insurance − other expenses − new loan payment

Then calculate your return on the cash left in:

> Cash-on-cash = annual cash flow ÷ cash left in the deal

If no cash is left in, cash-on-cash is technically infinite. Then the question is simply whether the cash flow is positive with a comfortable cushion. See [how to calculate cash-on-cash return](https://landlordsheet.com/how-to-calculate-cash-on-cash-return/) for more on this metric.

## A worked example (hypothetical numbers)

**Buy and rehab:**

- Purchase: $150,000
- Closing costs: $5,000
- Rehab (including contingency): $40,000
- Holding costs (5 months): $6,000
- **All-in cost: $201,000**

**Refinance:**

- ARV from sold comps: $250,000
- Lender LTV: 75%, so new loan = **$187,500**
- Refinance closing costs: $5,000
- Net cash back: $182,500
- **Cash left in the deal: $201,000 − $182,500 = $18,500**

**Rent and cash flow:**

- Rent: $2,300/month
- Vacancy, repairs, CapEx and management at 25% of rent: $575
- Taxes $3,000/year and insurance $1,500/year: $375/month
- New loan payment ($187,500, 30 years, 7%): about $1,247
- **Cash flow: about $103/month, or about $1,240/year**
- **Cash-on-cash on the $18,500 left in: about 6.7%**

Now stress-test it. If the appraisal comes in at $230,000 instead, the new loan drops to $172,500 and about $33,500 stays in the deal. If the rate is a point higher, the payment rises and cash flow can go negative. Those are the scenarios to know before you buy.

## The max-offer math (work backwards)

Many investors flip the calculation: decide how much cash you're willing to leave in, then solve for the most you can pay.

> Max all-in cost = (ARV × LTV) − refinance costs + cash you're willing to leave in Max purchase price = max all-in cost − rehab − closing − holding − financing costs

Using the example with $0 left in: (250,000 × 0.75) − 5,000 + 0 = $182,500 max all-in. Subtract $40,000 rehab, $5,000 closing and $6,000 holding: **max purchase ≈ $131,500**. That's your walk-away price for a full BRRRR at those assumptions.

## About the "Repeat"

The last R only works if the first deal leaves you with cash to deploy and a property that carries itself. Before you start the next one, check three things:

- **Liquidity:** after the refinance, do you still have healthy reserves for this property, plus the down payment, rehab and holding costs for the next?
- **Debt load:** every refinance adds a larger loan. Lenders look at your overall debt-to-income or the property's DSCR, and so should you.
- **Capacity:** rehabs take time and attention. Two at once is much more than twice the work.

Slower and solid beats fast and fragile. A string of thin-margin deals can turn one bad year into a crisis.

## Common BRRRR mistakes

- **Optimistic ARV** based on one great comp or active listings.
- **No rehab contingency.**
- **Ignoring holding and financing costs.**
- **Not confirming refinance terms** (LTV, seasoning, rate) before buying.
- **Analyzing cash flow at the purchase loan's payment** instead of the post-refi loan.
- **Forgetting reserves:** a newly rehabbed property still needs CapEx set aside. See [how much CapEx reserve per unit](https://landlordsheet.com/capex-reserve-per-unit/).

## Run it in a spreadsheet

All of the above, plus a flip-vs-hold comparison, is what the [BRRRR & Flip Analyzer ($24)](https://payhip.com/b/oAm5E?ref=landlordsheet.com) is built for: rehab budget, holding costs, refinance proceeds, cash left in and post-refi returns in one place. For the rent-and-hold side of any deal, the [Rental Deal Analyzer ($19)](https://payhip.com/b/vNzcd?ref=landlordsheet.com) adds DSCR, a five-year projection and a deal score. After the refinance, the [Loan Amortization & Payoff Tracker ($15)](https://payhip.com/b/lHihL?ref=landlordsheet.com) tracks your new loan and runs a refinance check if rates drop later.

Once it's rented, track actual income and expenses from the start with the [free Single-Property Tracker](https://payhip.com/b/DORST?ref=landlordsheet.com) or, for several properties, the [Rental Bookkeeping Workbook ($27)](https://payhip.com/b/IJ4pL?ref=landlordsheet.com).

Want one practical landlord tactic each week? [Subscribe free](#/portal/signup). New here? Start with [the Toolkit](https://landlordsheet.com/toolkit/).

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*This article is for general educational purposes and is not financial, lending or tax advice. Refinance terms, appraisal outcomes and loan programs vary by lender. Example figures are hypothetical. — Jon, Everyone's Landlord*