How does the BRRRR method work?

Buy a distressed property, rehab it to increase value, rent to a tenant, then do a cash-out refinance based on the new appraised value (After Repair Value). The refinance loan repays your initial investment, leaving the property in your portfolio with someone else's money (the bank's) funding the acquisition.

What is ARV and why is it critical for BRRRR?

After Repair Value (ARV) is the appraised value after all rehab is completed. ARV determines the maximum cash-out refinance amount. Most lenders refinance to 70–75% of ARV. If ARV is overestimated, the refinance pulls less cash and you're left with more capital stuck in the deal.

How much capital can you pull out in a BRRRR refinance?

Typically 70–75% of the After Repair Value (ARV), minus refinance closing costs (1–3% of the loan amount). On a $200,000 ARV property: 75% LTV = $150,000 loan, minus $4,500 closing costs = $145,500 net cash-out. Your all-in cost must be below that amount to fully recycle capital.

What does 'leaving no money in the deal' mean in BRRRR?

It means the cash-out refinance returns all of your initial investment (purchase price + rehab + holding costs + closing costs). You retain ownership of the cash-flowing asset while your capital is available to invest in the next property. In practice, fully recycling capital requires purchasing at 65–70% of ARV before rehab.

What is the 70% rule in BRRRR?

The 70% rule says your total all-in cost (purchase + rehab) should be no more than 70% of the property's After Repair Value. This leaves the remaining 30% as equity — the margin that allows a 70% LTV refinance to return your capital with some buffer for closing costs and error.

BRRRR Calculator: How to Analyze a Buy, Rehab, Rent, Refinance, Repeat Deal

Calculate BRRRR deal returns: how much capital you can recycle after refinancing, what ARV you need, and whether the deal meets your return thresholds.

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What the BRRRR Strategy Is

BRRRR (Buy, Rehab, Rent, Refinance, Repeat) is a real estate investment strategy designed to recycle capital across multiple properties:

Buy a distressed property below market value
Rehab it to increase value and make it rentable
Rent to a qualified tenant to generate income
Refinance with a cash-out loan based on the new appraised value
Repeat the process with the cash pulled out

The goal is to pull out most or all of your initial investment while retaining the property — effectively achieving an infinite or near-infinite return on remaining equity.

The BRRRR Math

After Repair Value (ARV): The appraised value of the property after rehab is complete. This is the foundation of the entire strategy.

Maximum Cash-Out: Most lenders will refinance up to 70–75% of ARV (Loan-to-Value):

Max Loan = ARV × LTV Ratio (typically 0.70–0.75)

Capital Left in the Deal = Total Investment − Cash-Out Received

Total Investment = Purchase Price + Rehab Costs + Holding Costs + Closing Costs

Example BRRRR Analysis:

Line Item	Amount
Purchase price	$85,000
Rehab costs	$40,000
Holding costs (6 months)	$4,200
Acquisition closing costs	$2,500
Total Investment	$131,700
After Repair Value (ARV)	$185,000
Refinance at 75% LTV	$138,750
Refinance closing costs	−$4,000
Net Cash-Out	$134,750
Capital Left in Deal	−$3,050

In this example, the investor pulled out $3,050 more than they invested — a complete recycling of capital with $3,050 profit on top. This property now generates rental income with zero remaining equity at risk (beyond the property's ongoing performance).

What Good BRRRR Numbers Look Like

Metric	Target
All-in cost vs. ARV	< 70–75% of ARV
Capital recouped	> 80% of total investment
Post-refi cash flow	Positive (DSCR > 1.0)
Rent-to-value ratio	0.8–1.2% of ARV per month
ARV estimate confidence	Within 10% of actual

The core BRRRR challenge is the ARV estimate. If your ARV comes in $15,000 lower than expected, the refinance pulls out less cash — and capital recycling suffers. Always use conservative ARV assumptions and build in a 10–15% buffer.

The Refinance Constraint

Most lenders require: - Property seasoning: 6–12 months of ownership before cash-out refinance - Lease in place with qualified tenant - Clean title and completed permitted work - Appraisal at or above projected ARV

DSCR lenders qualify on rental income; conventional lenders require income documentation. For BRRRR investors with multiple properties, DSCR portfolio loans are common.

When BRRRR Doesn't Work

Buying at market price: BRRRR requires buying at a significant discount. If you pay retail, there's no equity to pull out after rehab.

Over-improving: Spending $60,000 on rehab in a neighborhood where ARV maxes out at $130,000 doesn't leave room for a 75% LTV refinance to return your capital.

Rising interest rates: If refinance rates are high, post-refi debt service may produce negative cash flow. The property must cash flow positively after the refinance loan is in place.

Inaccurate ARV: Rely on comparable sales within 0.5 miles sold in the past 6 months. Optimistic ARV projections are the most common BRRRR failure mode.

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Frequently Asked Questions

How does the BRRRR method work?: Buy a distressed property, rehab it to increase value, rent to a tenant, then do a cash-out refinance based on the new appraised value (After Repair Value). The refinance loan repays your initial investment, leaving the property in your portfolio with someone else's money (the bank's) funding the acquisition.
What is ARV and why is it critical for BRRRR?: After Repair Value (ARV) is the appraised value after all rehab is completed. ARV determines the maximum cash-out refinance amount. Most lenders refinance to 70–75% of ARV. If ARV is overestimated, the refinance pulls less cash and you're left with more capital stuck in the deal.
How much capital can you pull out in a BRRRR refinance?: Typically 70–75% of the After Repair Value (ARV), minus refinance closing costs (1–3% of the loan amount). On a $200,000 ARV property: 75% LTV = $150,000 loan, minus $4,500 closing costs = $145,500 net cash-out. Your all-in cost must be below that amount to fully recycle capital.
What does 'leaving no money in the deal' mean in BRRRR?: It means the cash-out refinance returns all of your initial investment (purchase price + rehab + holding costs + closing costs). You retain ownership of the cash-flowing asset while your capital is available to invest in the next property. In practice, fully recycling capital requires purchasing at 65–70% of ARV before rehab.
What is the 70% rule in BRRRR?: The 70% rule says your total all-in cost (purchase + rehab) should be no more than 70% of the property's After Repair Value. This leaves the remaining 30% as equity — the margin that allows a 70% LTV refinance to return your capital with some buffer for closing costs and error.

Last updated 7/28/2026