BRRRR Calculator
Analyze the Buy, Rehab, Rent, Refinance, Repeat strategy to determine cash left in deal and returns.
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Expert FAQ
What is the "70% Rule" in the BRRRR context?
The 70% Rule suggests that an investor should pay no more than 70% of the After Repair Value (ARV) minus rehab costs. In BRRRR, this ensures that the final refinance at ~75% LTV will return all (or most) of the initial capital, achieving a "perfect" or "infinite" return.
How does the "Seasoning Period" affect the refinance step?
Lenders typically require a seasoning period—often 6 to 12 months—before they will refinance based on the new appraised value rather than the original purchase price. Without seasoning, investors may be stuck with a loan-to-cost (LTC) model rather than an LTV model.
What is "Refinance Risk" in a rising rate environment?
Refinance risk occurs when interest rates rise significantly during the rehab phase. A deal that penciled at a 4% refi might fail to cash flow at 7.5%, potentially forcing the investor to keep more equity in the deal than planned.
How do you handle a "Short Appraisal" after the rehab?
If the appraisal comes in lower than the projected ARV, the refi amount will be smaller, leaving "stuck" capital in the deal. Investors mitigate this by having multiple exit strategies (e.g., selling) or conservative ARV projections.
Can BRRRR be graduated to commercial multifamily?
Yes, known as "Value-Add Multifamily." The mechanics are similar but rely on Net Operating Income (NOI) growth through operational efficiencies and rent bumps rather than purely comparable sales.