Evaluate a Buy-Rehab-Rent-Refinance-Repeat deal. The key metric: how much of your invested cash you pull back out via the cash-out refi.
Cash left in deal after refi
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All-in cost
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Refi loan amount
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Cash recycled to next deal
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Monthly cash flow post-refi
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Cash-on-cash on remaining cash
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Equity created
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Recycling one pile of cash through many deals
The whole appeal of BRRRR is that you do not tie up fresh capital in every property. You buy a distressed house cheap, renovate it to lift its value, rent it out, then refinance against the new higher appraisal and pull most of your original cash back out. If the numbers work, you walk away owning a cash-flowing rental with little or none of your money left in it, and that recovered cash funds the next purchase. This calculator runs the full cycle and lands on the figure that decides whether it worked: how much cash stays trapped in the deal after the refinance.
Where the cash-out number comes from
Two figures drive the outcome. Your all-in cost is purchase price plus rehab plus closing and holding costs, the total you sink in. Your refinance loan is the after-repair value, the ARV, multiplied by the lender's loan-to-value limit, typically 70% to 75% for an investment property. Subtract the refi closing costs from that loan and you get the proceeds the bank hands you. Whatever your all-in cost exceeds those proceeds is the cash left in the deal. When proceeds cover the full all-in cost, you have pulled everything out and your return on remaining cash is effectively infinite.
A $120,000 buy, $40,000 rehab, $225,000 ARV
Walk through the default deal. You buy for $120,000, budget $40,000 of rehab, and add $6,000 of closing and holding, for an all-in cost of $166,000. The property appraises at a $225,000 ARV, and a 75% cash-out refinance is a loan of $168,750. After $5,000 of refi closing costs, the proceeds are $163,750. Since your all-in was $166,000, you leave just $2,250 in the deal, recover $163,750 to redeploy, and create $56,250 of equity. With $1,800 rent against $500 of operating expenses and a $1,180 mortgage payment at 7.5% over 30 years, you net about $120 a month, a 64.0% cash-on-cash return on that small slug of trapped cash.
| Line | Amount |
|---|---|
| All-in cost (buy + rehab + closing) | $166,000 |
| Refi loan (75% of $225,000 ARV) | $168,750 |
| Refi proceeds (loan less $5,000 costs) | $163,750 |
| Cash left in the deal | $2,250 |
| Monthly cash flow | about $120 |
| Cash-on-cash on remaining cash | 64.0% |
The assumptions that decide whether it really works
BRRRR lives or dies on the ARV and the rehab budget, and both are easy to get wrong in your favor. An optimistic ARV inflates the refinance loan and makes the deal look like a full cash-out when a sober appraisal would leave money stranded. The standard discipline is the 70% rule: keep your all-in cost at or below 70% of ARV so that even a 75% refinance comfortably returns your capital. In the example, $166,000 against a $225,000 ARV is about 74%, which is why a sliver of cash stays in rather than a clean zero. Rehab overruns are the other classic killer, so pad the budget and the holding period for the months the property sits empty during work.
A few real-world frictions the model glosses over. Most lenders impose a seasoning period, often six to twelve months, before they will refinance at the new appraised value rather than your purchase price, so the cash is not instantly recyclable. Rates on the cash-out refi run higher than owner-occupied rates, as the 7.5% here reflects, and pulling cash out resets your amortization and shrinks monthly cash flow. There are tax angles too: the refinance proceeds themselves are not taxable income because borrowed money is not income, and you continue to depreciate the property on Schedule E, but a future sale brings depreciation recapture. Treat a thin cash-on-cash number with respect, because a deal that barely cash-flows has little cushion for a vacancy or a major repair.
What counts as a good BRRRR deal?
The cleanest measure is how much of your cash you recover and whether the leftover rental still cash-flows. Pulling out most of your capital while keeping at least a few hundred dollars of monthly cash flow per unit is a strong result. Many investors target an ARV of at least 1.3 to 1.4 times their all-in cost to leave room for the refinance. A deal that returns all your cash but cash-flows near zero is fragile, while one that leaves some cash in but throws off healthy income can still be a fine long-term hold.
How is cash-on-cash return calculated here?
It is annual cash flow divided by the cash you still have in the deal after the refinance. In the example, about $1,440 of yearly cash flow against $2,250 of trapped cash is roughly 64%. The figure looks enormous precisely because the denominator is tiny, which is the leverage effect at the heart of BRRRR. When you pull out every dollar, the denominator hits zero and the return is shown as infinite, a reminder that the metric is most useful alongside total cash flow and equity, not on its own.