BRRRR Deal Analysis: Running the Numbers
By the ACC Solutions team
A BRRRR deal (buy, rehab, rent, refinance, repeat) works when the refinance gives back most of the cash you put in and the rent still covers the new loan. So the analysis has two tests: how much cash stays in the deal after the refinance, and whether the rent carries the property after it. ARV drives the first test, and rent drives the second. This guide shows how to run both, with clearly labeled made-up numbers, and where a quick ARV and rehab read fits.
Step 1: Get the ARV and rehab numbers first
Everything in BRRRR hangs on the after-repair value, because the refinance is based on what the house appraises for after the work. Build ARV from renovated comparable sales that are recent, close by and similar in size, beds and baths (see how to calculate ARV and how to pull comps). Then price the rehab. A first-pass number per square foot is fine for screening (how to estimate rehab costs per square foot); bids come before you buy.
The A.I. Deal Assistant gives you the first two inputs fast: paste an address or listing link and it returns ARV from recent comps, a rehab estimate, projected flip profit and a property snapshot. It does not run rental or refinance numbers; you do that part with the steps below or our free rental cash flow calculator.
Step 2: Add up your all-in cost
All-in cost is everything you spend before the refinance: purchase price, closing costs on the purchase, rehab, a contingency for surprises, and holding costs while the house sits empty (taxes, insurance, utilities, any interest on short-term money). Leaving out holding costs is the most common way a BRRRR that "works on paper" leaves cash stuck in the deal.
Step 3: Test the refinance (cash left in the deal)
The refinance amount is the appraised value times the share of value your lender will lend against. Lenders set that share, their own rules on how long you must own the property first, and their closing costs. Ask your lender for those three facts before you buy; we don't quote any lender's terms here.
Worked example, every number made up for illustration:
| Line | Hypothetical amount |
|---|---|
| Purchase price | $70,000 |
| Purchase closing costs | $3,000 |
| Rehab | $40,000 |
| Contingency (10% of rehab) | $4,000 |
| Holding costs during rehab | $4,000 |
| All-in cost | $121,000 |
| ARV (appraisal comes in here) | $160,000 |
| Refinance at an assumed 75% of value | $120,000 |
| Refinance closing costs (assumed) | $4,000 |
| Cash left in the deal | $121,000 − ($120,000 − $4,000) = $5,000 |
Here $5,000 stays in. If the appraisal comes in at $145,000 instead of $160,000, the same assumed 75% gives $108,750, and cash left in jumps to $16,250. That sensitivity is why a padded ARV is the costliest mistake in BRRRR.
Step 4: Solve backward for your maximum purchase price
Turn the refinance test around before you make an offer. If your goal is to leave little or no cash in:
Maximum all-in cost ≈ ARV × refinance share − refinance closing costs
Maximum purchase price ≈ that number − rehab − contingency − purchase closing − holding costs
With the made-up numbers above: $160,000 × 0.75 − $4,000 = $116,000 maximum all-in; minus $40,000, $4,000, $3,000 and $4,000 leaves a $65,000 maximum purchase price to get all your cash back. At the $70,000 price, you knowingly leave about $5,000 in. That is a decision, not a surprise.
Step 5: Test the rent after the refinance
Now check that the property carries itself with the new loan. Monthly: rent minus vacancy allowance, property management, repairs and capital reserves, taxes, insurance, any owner-paid utilities and the new loan payment. Our rental cash flow calculator lays out those lines. Use rent from leased comparable units, not asking rents, and get the loan payment from your lender's quote.
Continuing the made-up example: rent $1,400; vacancy 8% ($112); management 10% ($140); repairs and reserves ($200); taxes and insurance ($250); loan payment from a hypothetical quote ($760). Monthly cash flow = $1,400 − $112 − $140 − $200 − $250 − $760 = -$62. Negative. The refinance looked fine, but the rent test fails, so either the price, the rehab or the loan size has to change.
Mistakes that break BRRRR deals
- Using the list price or a Zestimate as ARV. The refinance follows the appraisal, which follows renovated sold comps.
- Forgetting the time between rehab and refinance. Lenders have rules on how long you must own the property; you carry holding costs the whole time.
- Underbudgeting the rehab for a rental. Rentals take wear. Durable finishes cost more up front; see how ACC coordinates Cleveland rehabs.
- Skipping local rental rules. In Cleveland, a rental must be registered with the city, and lead-safe rules apply to older homes before a tenant moves in. See the Cleveland rental registration and lead-safe checklist; delays there delay your first rent check.
- Counting on rent you haven't verified. Use leased comps, and plan for the unit to sit empty a while.
Where to start
Screen the purchase first: if the ARV and rehab don't leave room, the rent test doesn't matter. Paste the address into the A.I. Deal Assistant, read the ARV and rehab estimate, then run Steps 2 to 5 on the deals that survive. 100+ active real estate investors are already using the A.I. Deal Assistant, and the Free plan includes 10 searches with 72-hour access and no credit card needed.
Buying a BRRRR property in Cleveland from out of state? ACC Solutions coordinates rehabs and manages rentals here; see rental property management in Cleveland.
ACC Solutions team
Phone: (216) 238-5999 · Email: support@accmgmtsolutions.com · Contact form
6545 Market Ave N, Canton, OH 44721
Frequently Asked Questions
How do you analyze a BRRRR deal?
Run two tests. First, the refinance test: all-in cost minus the refinance amount (appraised value times your lender's lending share, less closing costs) shows how much cash stays in. Second, the rent test: rent minus vacancy, management, repairs, taxes, insurance and the new loan payment must stay positive.
What number matters most in a BRRRR deal?
The after-repair value, because the refinance amount is based on the appraisal after the rehab. A lower appraisal leaves more of your cash in the deal.
How do I find my maximum purchase price for BRRRR?
Multiply ARV by the share of value your lender will lend, subtract refinance closing costs, then subtract rehab, contingency, purchase closing and holding costs. What is left is roughly the most you can pay and still get your cash back.
Does the A.I. Deal Assistant analyze BRRRR deals?
It gives you the starting inputs from an address or listing link: ARV from recent comps, a rehab estimate, projected flip profit and a property snapshot. Run the refinance and rent tests yourself, for example with ACC's free rental cash flow calculator.
Are the numbers in this article real?
No. Every dollar figure in the examples is made up to show the math. Get refinance terms from your lender and rents from leased comparable units.
