How to use the brrrr calculator
- Enter the purchase price, the rehab cost and the closing and holding costs to get your all-in cost.
- Enter the value after repairs, the refinance loan as a share of that value and the refinance costs as a share of the loan. The percents are examples to replace with your lender's figures.
- Enter the interest rate, the loan term, the monthly rent, the vacancy and the monthly operating costs.
- Read the cash left in the deal, the new payment, the monthly cash flow and the cash-on-cash return.
Formula
all-in cost = price + rehab + closing and holding costs
cash returned = value x refinance share - refinance costs
cash left = all-in cost - cash returned
cash flow = rent x (1 - vacancy) - operating costs - payment
The payment is the level monthly payment of a fully amortizing loan, rounded to the cent. Cash-on-cash return is the yearly cash flow divided by the cash left, and it is not defined when no cash is left.
A $140,000 purchase with $35,000 of rehab
The all-in cost is $140,000 + $35,000 + $9,000 = $184,000.00. With a value after repairs of $230,000 and a 75% refinance, the new loan is $172,500.00. Refinance costs of 2.5% are $4,312.50, so $168,187.50 comes back and $15,812.50 stays in the deal, which means 91.4% of the cash was recovered. Equity after the refinance is $230,000 - $172,500 = $57,500.00.
At 7% over 30 years the payment is $1,147.65. Rent of $1,900 with 5% vacancy is $1,805.00, less $520 of operating costs and the payment, which leaves $137.35 a month, $1,648.20 a year. On the $15,812.50 left that is a cash-on-cash return of 10.42%. With a value of $300,000, the cash would be pulled out beyond cost and the return is not defined.
What the method tries to do
BRRRR stands for buy, rehab, rent, refinance, repeat. The idea is to buy a property that needs work, improve it, rent it out, and then refinance it for a loan based on the new, higher value. If the loan returns most or all of the money you put in, you can use that cash for the next deal. The key number is the cash left in the deal, because it decides how much the next property needs from you.
A result with negative cash left means the refinance returned more than the project cost. That depends entirely on the value after repairs, which a lender sets by appraisal, so a value that is too hopeful can make a poor deal look excellent. Enter a value you can defend with similar sales, and test a lower one.
What the numbers leave out
Every figure is an input, including the loan share the lender allows, the rate, the rent and the costs. The way you paid for the purchase and rehab, such as cash or a short-term loan, interest during the work, lender waiting periods before a refinance, reserves, property tax changes after a sale, and income taxes are not modeled. The page is for comparing deals on equal terms, not for deciding to buy.
To test parts of the deal on their own, use the Cash-Out Refinance Calculator and the Cash-on-Cash Return Calculator. For a flip instead of a rental, try the House Flip Calculator, and for a finished rental the Rental Property Calculator. Real estate investing carries risk, and this page is arithmetic, not advice.
Assumptions and limits
- Money is in dollars and cents. Percents have at most three decimals. The term is a whole number of years from 1 to 50.
- The refinance loan is a share of the value after repairs, with the costs taken from it.
- Rent, costs and the rate stay the same. Increases, repairs and vacancy beyond the percent you enter are not modeled.
- Nothing is stored or uploaded, and nothing here is investment or lending advice.
Frequently asked questions
How do you calculate cash left in a BRRRR deal?
Add the purchase, rehab and closing and holding costs, then subtract the refinance loan less its costs. In the example, $184,000 minus $168,187.50 leaves $15,812.50 in the deal.
Can you get all your money back in a refinance?
Only if the new loan, after costs, is at least your all-in cost. That needs a high enough value after repairs and a high enough loan share. When it does, the cash left shows as a negative number, which means cash pulled out beyond cost.
What is cash-on-cash return?
It is the yearly cash flow divided by the cash you have left in the deal. In the example it is $1,648.20 / $15,812.50 = 10.42%. It is not defined when no cash is left.
Why does the value after repairs matter so much?
Because the loan is a share of it. A higher value allows a bigger loan and returns more cash, so an inflated value makes a deal look better than it is. Base it on comparable sales and test a lower figure.