See how much capital you recover.

What is the BRRRR strategy?

BRRRR stands for Buy, Rehab, Rent, Refinance, Repeat. The core idea is to acquire a distressed property below market value, add value through renovation, stabilize it with a tenant, then pull out your invested capital via a cash-out refinance — ideally recovering enough to fund the next deal without leaving money idle in a single property.

Unlike a traditional buy-and-hold where your down payment is locked up indefinitely, BRRRR treats each deal as a recycling event. If you execute the rehab and refi correctly, you can own the property with little or no personal capital remaining, earning rental income on someone else's (the lender's) money.

Full capital recovery: what “infinite return” means

When the refinance loan amount equals or exceeds your total invested capital (purchase price + rehab), you have achieved full capital recovery. Cash left in deal reaches zero or goes negative, which means you pulled out 100% or more of your own money. The property now generates cash flow with zero personal capital at risk — mathematically an infinite return on invested equity.

This calculator shows cash left in deal as the primary metric because it is the clearest signal of whether a BRRRR deal worked. A negative cash left in deal is good — it means you extracted more than you put in. A large positive number means you are still heavily exposed to a single asset.

The refinance: LTV, appraisal, and timing

The refinance is the hinge of the whole strategy. Most lenders will go to 70–80% LTV on a non-owner-occupied investment property. DSCR loans — which qualify on the property's rental income rather than your personal income — are the most common vehicle. Key variables:

• ARV appraisal — the lender orders their own appraisal; use conservative ARV estimates (± 5–10% buffer) so you are not surprised by a lower-than-expected value.
• Seasoning requirements — many lenders require 3–6 months of ownership (and sometimes rental history) before they will refinance. Factor this into your holding-cost budget.
• Rate environment — a higher refi rate shrinks cash flow but does not affect capital recovery. Model both capital recovered AND monthly DSCR before committing.

DSCR: the post-refi test every deal must pass

Full capital recovery means nothing if the resulting mortgage payment exceeds your rental income. The DSCR check is essential: most DSCR lenders require 1.20–1.25 minimum to approve the refi in the first place. Even if you use a different lender, a sub-1.0 DSCR means you will write a check every month to cover the mortgage shortfall — erasing the passive-income thesis.

A BRRRR deal that achieves full capital recovery AND a DSCR above 1.20 is a textbook win. If DSCR is healthy but you still have capital left in the deal, the strategy partially worked — you reduced exposure while retaining cash flow.

BRRRR FAQ

What does BRRRR stand for and how does the strategy work?

BRRRR stands for Buy, Rehab, Rent, Refinance, Repeat. The investor buys a distressed property below market value, renovates it to force appreciation, rents it out to cover carrying costs, then does a cash-out refinance based on the higher after-repair value (ARV). The refi proceeds are used to recover the initial capital — ideally pulling out enough to fund the next deal without tying up personal funds indefinitely.

What is "cash left in deal" and why does it matter?

Cash left in deal is the capital still tied up in the property after the refinance: total invested (purchase + rehab) minus the refinance loan amount. If cash left in deal reaches zero or goes negative, you have achieved "full capital recovery" — meaning you pulled out 100% or more of your invested capital while still owning the property. Your effective return on that deal becomes infinite because you have zero dollars at risk.

What is a realistic LTV for a BRRRR refinance?

Most DSCR lenders and conventional lenders will refinance an investment property at 70–80% LTV based on the appraised ARV. 75% is the most common threshold for DSCR loans. Going above 80% LTV on a non-owner-occupied property typically requires private or portfolio lenders at higher rates. Conservative underwriting uses 70–75% LTV to leave margin for appraisal variance.

How are operating expenses estimated in this calculator?

The "Operating expenses" input represents all costs as a percentage of effective gross income (EGI = rent adjusted for vacancy) — excluding the refi mortgage payment, which is shown separately. A 35% expense ratio is a reasonable all-in estimate for a well-maintained single-family, covering maintenance (~5–8%), property management (~8–10%), and miscellaneous items. Older properties or those in harsher climates should budget 40–50%.

What is DSCR and why does it matter for BRRRR deals?

Debt Service Coverage Ratio (DSCR) is net operating income divided by the monthly refi payment. A DSCR below 1.0 means the rental income does not cover the new mortgage — you will need to subsidize it from personal funds each month. Most DSCR lenders require 1.20–1.25 minimum to qualify for the refinance in the first place. A BRRRR deal that shows full capital recovery but a sub-1.0 DSCR is cash-flow-negative after the refi, which defeats much of the strategy.

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