BRRRR Calculator

How to Use the BRRRR Calculator

BRRRR — The Capital-Recycling Real Estate Strategy

10 Facts About BRRRR

Frequently Asked Questions

• What's a true "infinite return" BRRRR?+
  When the cash-out refinance returns 100% or more of the total cash invested (purchase + rehab + closing + holding costs). Mathematically: cash recycled ÷ cash invested = ∞ as cash-in approaches zero. In practice, leaving USD 0-10K in a deal is treated as "true BRRRR" — fully scalable since you can repeat the strategy with the same dollars.
• How do I estimate ARV reliably?+
  Use 3-5 SOLD comparables (not active or pending) within 90 days, same bed/bath count, within ½ mile, condition similar to your post-rehab plan. Adjust for square footage and lot size. Pull from MLS via realtor or paid Investorlift / Propstream. Don't trust Zillow Zestimate for ARV — it's a model trained on broad data, not your specific micro-neighborhood. Best practice: get a "comparative market analysis" (CMA) from a local agent before closing.
• What's the seasoning period?+
  Most US lenders require 6 months of ownership before cash-out refi at the appraised (ARV) value. Some require 12. Fannie Mae's "delayed financing exception" lets you cash-out refi within 6 months at acquisition cost (purchase + closing) — useful intermediate option. Local credit unions and portfolio lenders sometimes waive seasoning entirely. Get the seasoning requirement in writing from your refi lender BEFORE closing.
• Hard money vs cash for the purchase?+
  Cash is simplest + cheapest (no interest, fastest close, often largest discount). Hard money lets you scale faster (less capital tied up) but costs 8-12% interest + 2-3 points over 6-12 months — adds USD 8-15K of cost to typical USD 150K purchase. Use cash when you have it; use hard money to scale deal flow when you don't. Either path lands at the same refi step.
• Which markets work best for BRRRR?+
  Best: Midwest (Indianapolis, Memphis, Cleveland, Kansas City, Cincinnati) + Rust Belt (Detroit, Pittsburgh, Buffalo). Low purchase prices (USD 80-200K) + reasonable rents + meaningful distressed inventory. Worst: high-cost coastal markets (CA, NY, MA, WA) — entry prices too high to leave room for the BRRRR spread. Picking the right market is more important than picking the right deal within a market.
• What if the refi appraises low?+
  Most common BRRRR failure mode. Options: (1) order a 2nd appraisal at your cost (~USD 500) if the first seemed conservative; (2) wait 6-12 months and re-appraise after additional market appreciation; (3) shop the refi to multiple lenders (each orders separate appraisal); (4) accept the lower refi proceeds and treat the deal as a "modified BRRRR" with cash left in. Building a relationship with one local appraiser known for fair valuations helps over multiple deals.
• What's the 70% rule and how does it relate?+
  The 70% Rule (originally for flippers): max purchase price = 70% × ARV − rehab cost. For ARV USD 260K, rehab USD 40K: max purchase = (260K × 0.70) − 40K = 142K. For BRRRR, the 75% Rule is slightly more permissive (since you'll hold the property, not flip, so no realtor commission on sale). Either rule serves as a sanity check that your purchase price leaves enough spread to BRRRR successfully.
• Can I BRRRR multifamily?+
  Yes, and often better than single-family. 2-4 unit residential follows the same rules. 5+ unit commercial uses commercial financing — typically 70-75% LTV cash-out refi based on actual NOI rather than appraised value (called "DCR-based" lending). The math is the same; the appraisal methodology differs (income approach vs sales-comp approach). Commercial BRRRR is more scalable per deal but requires larger capital + different lender relationships.
• Tax implications of cash-out refi?+
  Cash-out refinance is NOT a taxable event — it's borrowed money, not income. You can pull equity out tax-free and use it for another property. The interest on the refi loan IS deductible against rental income on Schedule E. Be careful with "tracing rules" — if you use refi proceeds for personal use (not investment), the interest on that portion isn't deductible. Always have your CPA structure the trace properly when refi proceeds fund mixed-use purposes.
• I'm a foreign investor — can I BRRRR?+
  Mechanically yes, but harder financing. Foreign-national mortgages typically max at 60-65% LTV refi vs 75-80% for US residents — reducing the recycle amount. Hard money is available but at slightly higher rates. Often easier to BRRRR via a US-citizen partner or US LLC with US-resident manager. Cash + LLC purchase is the cleanest path for foreign investors who want to avoid the financing friction.

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