Definitions • Assumptions • Pitfalls

BRRRR: What the calculator means

This page explains the terms used in the BRRRR analyzer and how to interpret the outputs. BRRRR is sensitive to assumptions—especially ARV, rehab budget, timeline, and refinance terms.

BRRRR Strategy

BRRRR is a value-add rental strategy:

Buy below (or at) value
Rehab to improve condition and value
Rent to stabilize income
Refi based on the improved value (ARV)
Repeat using recycled capital

The goal is usually to recover most (or all) of your invested cash at refinance while still cash flowing.

Key Outputs

Output	Meaning
Cash Invested (pre-refi)	Down payment + purchase closing + rehab budget + estimated holding costs.
Net Refi Proceeds (approx)	New refi loan − payoff of purchase loan − refi closing costs.
Cash Left In Deal	Cash invested − net refi proceeds (if negative, you pulled more out than you put in).
Post-Refi Cash Flow	Stabilized rent − (OpEx + refi P&I + taxes + insurance).

The “net refi proceeds” is an estimate. Real proceeds depend on lender rules, seasoning, appraisal, DSCR, and closing fees.

ARV, LTV, and the Refi Loan

ARV (After Repair Value)

ARV is the estimated market value after rehab. It usually comes from comps (recent comparable sales), adjusted for size, condition, features, and location.

ARV is the single most important number in BRRRR. If ARV is wrong, everything else becomes noise.

LTV (Loan-to-Value)

LTV is the refinance loan amount as a percent of the appraised value (often ARV). Example: ARV $400k at 75% LTV → refi loan $300k.

Many lenders use DSCR and may cap loan size based on rent, not just LTV.

Why “Cash Left In” matters

Cash left in is a practical measure of how “recyclable” your capital is. Lower cash left in means you can repeat faster. But it’s still important that the stabilized deal cash flows.

A common BRRRR “win” is: small (or zero) cash left in + positive stabilized cash flow.

Holding Costs

The calculator estimates holding costs as:

Component	Description
Loan payment (monthly)	Interest-only or amortizing payment on the purchase loan.
Taxes & insurance (monthly)	A monthly estimate during rehab; this may differ after stabilization.
Other holding (monthly)	Utilities, lawn/snow, dumpsters, security, etc.
Total holding	Rehab months × (all monthly holding components)

Reality check: timeline slippage is one of the most common BRRRR killers. Add buffer months.

Post-Refi Underwriting

Post-refi cash flow is based on stabilized rent and a simplified cost stack: operating expenses (% of rent) + refi mortgage P&I + taxes + insurance.

This is not full pro-forma underwriting. It excludes reserves, leasing fees, and rent growth. Use it to compare deals, then validate with detailed underwriting.

Operating Expenses (OpEx)

OpEx usually includes vacancy, management, repairs/maintenance, CapEx reserves, and owner-paid utilities/HOA. Taxes and insurance are modeled separately in this analyzer.

Common BRRRR Pitfalls

ARV optimism

Overestimating ARV is the fastest way to “create” a good BRRRR on paper. Use conservative comps and confirm with an agent/appraiser perspective when possible.

Rehab budget creep

Underestimating rehab or missing major systems (roof, sewer, electrical) can destroy the model. Keep a contingency line in your head even if it isn’t explicitly in the calculator.

Timeline slip

Permits, contractors, inspections, supply delays, and weather can add months. Holding cost is a silent killer—add buffer months.

Refi reality

Lenders may require seasoning, DSCR minimums, and will have closing costs that vary. Your actual proceeds may be materially different.

If the deal only works with perfect assumptions, it probably doesn’t work.

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