BRRRR Method: How to Run the Numbers (Example)
Buy, Rehab, Rent, Refinance, Repeat. Calculate all-in cost, ARV, cash left in the deal, and post-refi cash flow, with a full worked example and what breaks a BRRRR.
By Real-Estate Analyzer Team · Updated
BRRRR stands for Buy, Rehab, Rent, Refinance, Repeat. You buy a property that needs work, renovate it, rent it out, then do a cash-out refinance against the new, higher value to get most of your money back, and use it on the next deal.
Done well, BRRRR lets a small amount of capital build a portfolio. Done badly, it leaves your cash trapped in a property that doesn't cash flow. The difference comes down to five numbers, which this guide walks through with a full worked example.
The Five Numbers That Decide a BRRRR Deal
- All-in cost = purchase price + rehab + purchase closing costs + holding costs (loan interest, taxes, insurance, and utilities during the rehab).
- ARV (after-repair value): what the property will appraise for once renovated. Base it on recent sold comps of renovated homes, not list prices.
- Refinance loan = ARV × the lender's max cash-out LTV, commonly 70–75% for investment properties.
- Cash left in the deal = all-in cost − (refinance loan − refinance closing costs). Zero or less is a “perfect BRRRR”.
- Post-refi cash flow = NOI − the new mortgage payment. The refinance loan is bigger than a normal purchase loan, so this is where many BRRRRs fail.
Worked Example: $150k Purchase, $240k ARV
A dated 3-bed bought for $150,000 cash (or with a short-term loan), renovated for $40,000, and refinanced at 75% of a $240,000 appraisal at 7%.
After the refinance you own a $240,000 house with a $180,000 loan, which is exactly the sample deal from our cap rate and cash-on-cash guides. It earns $16,620 NOI and $187/month after the mortgage. A buyer who paid $240,000 with 25% down gets a 3.35% cash-on-cash return. You have only $24,100 in the deal, so the same $2,250 a year is a 9.3% return, plus $60,000 of equity you created.
Check the Post-Refinance Rental
Model the property as it will look after the refinance: price = ARV, down payment % = 100 − the refinance LTV, and your expected refinance rate. The cash-on-cash shown here is based on 25% equity plus closing costs. For your real BRRRR return, divide annual cash flow by your cash left in the deal.
Expenses = taxes, insurance, maintenance, management, vacancy (not the mortgage). Assumes a 30-year loan and 3% closing costs.
This deal keeps $187.46 a month. The analyzer tests what happens if the numbers don't hold.
Stress-test this dealWhat Breaks a BRRRR
Same deal, one thing going wrong at a time:
| Scenario | Cash left in | Cash flow/mo | Return on cash left |
|---|---|---|---|
| Plan | $24,100 | $187 | 9.3% |
| Appraises at $220k, not $240k | $38,800 | $287 | 8.9% |
| Rehab runs 25% over ($50k) | $34,100 | $187 | 6.6% |
| Rehab takes 12 months, not 6 | $30,100 | $187 | 7.5% |
| Refinance rate 8%, not 7% | $24,100 | $64 | 3.2% |
A low appraisal traps more cash but leaves a smaller loan, so the return holds up. Rehab overruns and delays trap cash without improving anything. A higher refinance rate is the most dangerous: cash flow nearly disappears and DSCR drops to 1.05, which may fail a DSCR lender's minimum and block the refinance entirely.
BRRRR Rules of Thumb (and Their Limits)
- The 70% rule: purchase + rehab ≤ 70% of ARV. Our example is $190,000 ÷ $240,000 = 79%, and it still leaves $24,100 in. Hitting 70% is what gets you close to a full cash-out.
- Seasoning: many lenders will only use the new appraised value after you have owned the property for 6–12 months. Confirm before you buy, because it decides how long your cash is tied up.
- Stress-test the refinance: run the post-refi numbers at your expected rate + 1%. If it doesn't cash flow there, you are speculating on rates.
BRRRR is one of five core approaches covered in our investment strategies guide. It suits investors with time and renovation skills, rather than those who want passive income from day one.
Key Takeaways
- 1Cash left in the deal = all-in cost − net refinance proceeds. Your BRRRR return is cash flow ÷ that number.
- 2Our example leaves $24,100 in a $240k property, turning a 3.35% cash-on-cash deal into a 9.3% return.
- 3The refinance rate is the biggest risk: +1 point cut cash flow by two-thirds in the example.
- 4Aim for purchase + rehab ≤ 70% of ARV if you want most of your cash back.
- 5Check the lender's seasoning period and post-refi DSCR before you buy.
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A small team of investors. Every worked example in our guides is calculated with the same engine the analyzer runs. How we check our numbers. Educational content, not tax, legal, or investment advice.