How to Calculate BRRRR Numbers Before You Buy

August 17, 2026 · Creative real estate finance, explained with real deals

Generated (Gemini), via Wikimedia Commons

This is for investors considering a Buy, Rehab, Rent, Refinance, Repeat deal who want to know if the numbers actually work before they wire earnest money. The single most important decision is how much of your own cash you're willing to leave in the property after the refinance. Get that decision right first, and the rest of the math tells you clearly whether a specific house is a BRRRR deal or just a rental with extra steps.

Decide this first

Before you touch a spreadsheet, decide what "getting your cash back" means to you personally. BRRRR works best when the refinance returns enough cash to fund your next purchase. Some investors are fine leaving 10-20% of their investment parked in a property if the cash flow and equity are solid. Others need close to 100% of their cash back or the whole strategy stalls. Pick your target before you calculate anything, because it changes what purchase price and rehab budget you can accept. A deal that looks great if you're okay leaving $15,000 in it can look terrible if your rule is zero cash left behind.

What to look for

Purchase price with room built in

Work backward from the after-repair value, not forward from the asking price. A common starting point is the 70-75% rule: purchase price plus rehab costs should land at or below 70-75% of ARV. That range isn't a law, it's a cushion for the things you'll get wrong. In markets with thin margins or high property taxes, some investors tighten it to 65%. Whatever percentage you use, write it down before you look at the house so the number on the listing doesn't talk you into a worse deal.

A rehab budget with a real contingency

Get a contractor walkthrough, not a guess based on square footage. Then add 15-20% on top as a contingency, because older houses hide problems behind walls and under flooring. If your rehab budget has no contingency line, it's not a budget, it's a wish. Track separately: cosmetic work (paint, flooring, fixtures), systems (roof, HVAC, electrical, plumbing), and anything structural. Systems and structural issues are where budgets blow up, not cabinets.

An ARV based on actual comps

Pull three to five comparable sales that closed in the last three to six months, within a half mile if possible, similar square footage and bed/bath count. Adjust for condition honestly. If your comps are stale, too far away, or noticeably nicer than what you'll actually deliver, your ARV is inflated and everything downstream is wrong. This is also the number your refinance appraisal will test, so don't build your plan on a number an appraiser won't independently reach.

Rent that covers the new loan and then some

After the refinance, run the numbers as a normal rental: new mortgage payment (principal, interest, taxes, insurance), plus 8-10% for vacancy and maintenance, plus property management if you'll use it. The rent needs to cover all of that with room left over, typically $150-300 a month in cash flow at minimum, depending on your market and goals. If the rent barely covers the mortgage with nothing left for repairs, the deal is fragile the first time a water heater fails.

What to ignore

Ignore comps with finishes far above what your rehab budget will actually produce. A comp with a fully remodeled kitchen and new roof doesn't apply if your rehab is paint, carpet, and fixtures. Ignore appreciation projections when you're underwriting the deal today; appreciation is a bonus, not a load-bearing assumption. Ignore other investors' return claims from forums or social media without seeing their actual numbers, because "I made $40,000 on this deal" rarely accounts for holding costs, their own labor, or a soft refinance appraisal. And ignore a lender's teaser rate that only applies to borrowers with far better credit or lower leverage than you actually have. Ask for the rate that applies to your real numbers before you get attached to it.

Common mistakes

The most common mistake is underestimating rehab costs because the buyer only walked through once and didn't open panels, check the attic, or run the water. Contractors quote what they can see. Hidden electrical, old galvanized plumbing, or a roof with 2-3 years of life left can add tens of thousands to a budget that looked tight but doable on paper. Build the contingency in from the start instead of hoping you won't need it.

The second common mistake is not accounting for the seasoning period, the length of time a lender requires you to own the property before they'll refinance based on the new ARV instead of the purchase price. Many lenders require six to twelve months of seasoning, sometimes longer for cash-out refinances. That means your cash is tied up longer than planned, and you're carrying a hard money or private loan payment that whole time. Run your numbers assuming the longer end of that range, not the best case.

The third mistake is treating the refinance appraisal as a formality. It isn't. Appraisers use their own comps and their own judgment, and a soft market or an overly optimistic ARV means the appraisal comes in below what you expected. When that happens, the refinance pulls out less cash than planned, sometimes leaving thousands more in the deal than you budgeted for. Stress test your plan at an ARV 5-10% below your estimate and see if the deal still works. If it doesn't survive that test, it's too thin to start.

FAQ

What's a reasonable all-in number to target before buying?

A common target is purchase price plus rehab landing at 70-75% of ARV, though tighter markets or thinner margins push some investors to 65%. This isn't a fixed rule, it's a cushion. The right number for you depends on how much cash you're comfortable leaving in the deal and how confident you are in your rehab estimate and comps.

How much cash should I expect to leave in the property after refinancing?

It's rare to get 100% of your cash back out, especially after accounting for closing costs on both the purchase and the refinance. A realistic range for many BRRRR deals is 10-20% of total cash invested left in the property after refinance, sometimes more if the appraisal comes in soft. If your plan only works with a perfect appraisal and zero cash left behind, tighten your purchase and rehab numbers before you buy.

Do all lenders require a seasoning period before cash-out refinancing?

Most conventional and many portfolio lenders do, commonly six to twelve months, though terms vary by lender and loan program. Some local banks and credit unions offer shorter seasoning or none at all, particularly for borrowers with an existing relationship. Ask about seasoning requirements before you close on the purchase, not after, since it directly affects how long your cash is tied up.

If the math on a specific deal isn't adding up the way you expected, that's often the deal telling you something honest. Paper & Property covers real closed deals, including the ones where the refinance didn't go as planned, if you want to see how these numbers play out in practice.