BRRRR stands for Buy, Rehab, Rent, Refinance, Repeat. The appeal is simple: force value into a property, rent it, refinance at the new value, and recover most or all of the capital you put in. The risk is equally simple. Every stage depends on an assumption that can move, and the refinance happens after you have already spent the money.
The arithmetic below matches the calculator. It is a planning model, not financial, tax or legal advice, and it deliberately excludes anything that cannot be derived from the numbers you enter.
The four stages, and what each one costs
1. Buy
You purchase a property that needs work, usually below the price of a finished comparable. The purchase price is not the only cost. Expect closing costs, loan points, and the carrying costs of owning a construction project: taxes, insurance, utilities and possibly loan payments. The model treats all of these as part of the all-in cost.
The acquisition loan is modelled as a percentage of purchase price plus rehab. Lenders vary, so change the LTV until the loan amount matches your term sheet.
2. Rehab
The rehab budget should include the work that changes value and the work that makes the property rentable. It should also include a contingency, because the one certainty in renovation is that the scope will move. The calculator takes a single rehab number; the contingency belongs inside it.
Time matters as much as cost. Every extra month of holding adds taxes, insurance, utilities and debt service, so the model uses holding months to count acquisition-loan payments before refinancing.
3. Rent
Rent is the engine of the long-term return, and the number most likely to be optimistic. Use a rent you can support with comparable leases, not the highest listing in the postcode. The model separates gross rent from the operating costs that determine net operating income:
Vacancy, management and maintenance are entered as percentages of gross rent. Taxes, insurance and HOA are entered as annual or monthly dollar amounts. NOI is deliberately before debt service, because lenders compare it with debt service to produce DSCR.
4. Refinance
After the property is stabilized and appraised, you replace the acquisition loan with a long-term loan based on the after-repair value. The new loan pays off the old balance and closes with its own costs. Whatever remains is the cash the deal returns.
A negative gross cash-out is not a bug. It means the new loan does not cover the old balance and closing costs, so you must bring additional cash to the closing table. The calculator shows that outcome honestly rather than hiding it behind a zero.
Cash left vs cash pulled out
This distinction makes BRRRR conversations confusing. After the refinance, two different things can be true at once: some of your original capital may still be stuck in the deal, and some may have come back to you.
If you put in $60,000 and the refinance returns $40,000, your cash left is $20,000 and you pulled out nothing. If it returns $90,000, your cash left is zero and $30,000 has been returned to you. That $30,000 is returned capital, not profit. You still own the property, you still owe the new loan, and you have not paid tax on anything. Calling it profit is how otherwise sensible people talk themselves into bad deals.
The calculator floors cash left at zero for display. It does not net the pulled-out amount against future costs, and it does not treat the extraction as a gain. Equity after the refinance is shown separately as ARV minus the new loan.
DSCR, and why the +200 basis point test matters
Debt service coverage ratio compares the property's net operating income with the debt service on the new loan. It is the number a rental lender is most likely to underwrite.
A DSCR of 1.20 means NOI covers debt service 1.2 times. A common underwriting threshold is 1.20, but lenders differ by product, market and borrower, so treat 1.20 as a test in this model, not a universal rule. The sensitivity grid marks 1.20 so the threshold is visible.
The second DSCR adds 200 basis points to the refinance rate while keeping the loan amount and term fixed. Rates move between application and closing, and a deal that only works at the quoted rate is fragile. The stress test answers a blunt question: if the loan reprices two points higher, does the property still cover its debt?
If the stressed DSCR falls below your threshold, you can respond by negotiating a lower price, reducing the refinance LTV, raising rent, trimming operating costs, or walking away.
The max-offer solver
Most calculators ask what a deal returns at a given price. Buyers need the inverse: what is the highest price I can pay and still keep no more than a target amount of cash in the deal?
The solver holds every other assumption fixed, then searches purchase prices. At each price it rebuilds the acquisition loan, holding costs, refinance payoff and cash-out, and measures cash left. Cash left rises as the purchase price rises, so a binary search converges on the boundary in a few dozen iterations.
Two edge cases are shown explicitly: no positive offer can satisfy a target that fails even at a zero price, and a result that stays below target at the search ceiling is labelled as a cap, not a recommendation. The displayed price is rounded down to the nearest $100.
Repeat engine and exit comparison
The repeat engine asks how many identical deals a fixed capital pot can buy. Each cycle puts the deal's initial cash to work, receives the refinance proceeds, and carries the remaining capital forward:
If each cycle returns at least the cash required, the model reports that capital recycles indefinitely and stops at ten doors. If capital falls short, it reports the cycle where the next deal can no longer be closed. This is a deterministic illustration, not a projection: identical properties, identical terms, no rent growth, no price growth and no surprises.
The exit comparison puts three strategies on the same property: fix and flip, BRRRR and hold, and hold without refinancing. Profit includes operating cash flow and sale proceeds after selling costs, with no appreciation.
Assumptions and limits
Every model is a simplification, and this one is explicit about its simplifications:
- No income tax, depreciation, capital gains or 1031 exchange treatment.
- No property appreciation or rent growth. Exit values equal today's ARV.
- No vacancy beyond the percentage you enter, and no lease-up period after rehab.
- No construction overruns, draw fees, or carrying costs beyond the monthly figure.
- No lender reserves, seasoning requirements, DSCR floors, or entity costs.
- One amortization term for both loans; interest-only acquisition debt is approximated by setting the term long and the rate to match the payment.
- Closing costs, points and selling costs are percentages you supply, not quotes.
- The repeat engine assumes the same deal is available repeatedly at the same terms.
The point of a planning model is not to predict the future. It is to make your assumptions visible, so you can see which ones the deal depends on and which ones you can verify before you commit. Change one input at a time and watch what moves. If the deal only works at the optimistic end of every range, that is the finding.
Put these formulas to work.
The calculator runs every step above in your browser.
UtilityLab is not a lender, broker, appraiser, tax adviser or investment adviser. This guide is educational, and the calculator is a planning model based entirely on user inputs. Verify every assumption independently before making a decision.