BRRRR Investment ROI Calculator

ARV is the number everyone gets wrong

After Repair Value is the single input on this page with the most leverage over the answer, and it is the one people are least disciplined about. Change the purchase price by five thousand dollars and the result moves by five thousand dollars. Change the ARV by five thousand and the result moves by whatever your LTV is — but more importantly, the ARV is the only input you are estimating about a thing that does not yet exist. The purchase price is a contract. The rehab budget is a set of quotes. The ARV is a prediction about what a stranger with a clipboard will write down several months from now, and every incentive you have is pushing that prediction upward.

An honest ARV comes from recently sold comparable properties, not from listings. A listing price is what a seller hopes for; a sold price is what someone actually paid. It comes from properties that are genuinely comparable — similar size, similar condition after your work is done, similar street, and close by, because value changes across a boundary that is invisible on a map. It comes from sales that are recent, because a comparable from eighteen months ago is describing a different market. And it comes from someone who does not benefit from the number being high. The agent who will list the property, the wholesaler who sold you the deal, and you yourself at eleven at night with a spreadsheet open are all, structurally, the wrong sources.

The reason this matters so much more here than in a normal purchase is that in a BRRRR the ARV is doing two separate jobs at once. It determines what the property is worth, which is the ordinary job. And it determines the size of your refinance loan, which is what decides whether your capital comes back. An ARV that is optimistic by ten percent does not make you ten percent poorer. It reduces your loan by ten percent of the ARV, and that entire shortfall lands on the cash left in the deal — the number that was supposed to be zero. On a two-hundred-thousand-dollar ARV, being wrong by ten percent can be the difference between recovering all of your capital and leaving fifteen thousand dollars of it stranded in a house you now cannot sell without costs.

Which leads to the rule that is worth more than the rest of this page combined: a deal that only works at an optimistic ARV is not a deal. Run the number twice, once at what you believe and once at something meaningfully more conservative, and look at what happens to the cash left in the deal. If the conservative version leaves you with capital stranded and no cash flow to justify it, you have not found a marginal deal — you have found a deal that requires you to be right about the one thing you cannot control.

Seasoning: the refinance may not be available when you want it

This calculator models the refinance as though it happens the moment the work is finished. Lenders frequently do not see it that way. Many impose what is called a seasoning period — a minimum length of time you must have owned the property, or the loan must have existed, before they will lend against the new appraised value rather than against what you paid for it. The distinction is the whole ballgame. If the lender will only lend against your purchase price, the ARV you worked so hard to create does not enter the calculation at all, and the loan is far smaller than the figure on this page.

We are not going to tell you how long that period is, because it varies by lender, by loan product, by country and over time, and we have no verified source for it here. What we can tell you is that it exists, that it is one of the first questions to ask a lender, and that the answer changes your plan rather than your paperwork. A seasoning requirement means your capital is unavailable for that entire stretch — you are not doing the next deal during it — and it means you are carrying whatever financing got you through the purchase and rehab in the meantime, which is usually expensive short-term money.

The practical consequence is that the number this page gives you is a picture of your position at a specific future moment, not a description of the months before it. Those months have their own costs: interest on a short-term loan, utilities and insurance on a vacant property, and the plain fact that a house under renovation collects no rent. None of that appears in this calculation, and none of it is optional in real life. Ask the seasoning question before you buy, not after the last coat of paint.

Why a lender stops short of the full value

The LTV field is where the deal is usually decided, and seventy-five percent is a figure you will hear quoted constantly as the ceiling for a cash-out refinance on an investment property. Treat that as a common starting assumption to check, not as a rule — it moves with the lender, the product, the number of properties you already own, whether the property is owner-occupied, and the credit market at the time you ask.

What is worth understanding is why the ceiling exists at all, because the reason tells you how firm it is. The gap between the loan and the value is the lender's protection against being wrong about the value. If they lend seventy-five percent and the appraisal was optimistic by ten, they still have room. It is also protection against the cost of recovering the property if you stop paying, which is never free and is rarely quick. And an investment property is riskier to them than the home you live in, for the straightforward reason that when money is tight people pay the mortgage on the house they sleep in first. Every one of those reasons pushes the ceiling down for a rental, which is why the LTV available on a rental is usually below what the same borrower could get on their own home.

For your purposes the practical effect is arithmetic and unforgiving. The share of the ARV the lender will not lend is the share you have to fund yourself, forever, until you sell or refinance again. At seventy-five percent LTV on a two-hundred-and-twenty-thousand-dollar ARV, that is fifty-five thousand dollars of value you cannot borrow against. Your capital only comes back if everything you spent — purchase and rehab together — comes in below the remaining hundred and sixty-five thousand. That single inequality is the BRRRR deal in one line, and it is why experienced investors talk about buying at a discount rather than buying cheaply. The discount is not the profit. The discount is the room the lender leaves you.

Vacancy and capex are real expenses, and most people omit them

Three of the expense fields on this page are percentages of rent rather than fixed monthly amounts, and they are the three most commonly left at zero by someone who wants the deal to work. That is not an accident of interface design. It is the shape of the mistake.

Vacancy is not a risk, it is a cost. Over any horizon long enough to matter, a tenant moves out, the unit sits for some number of weeks while you clean and show it, and you collect nothing during that time. Averaged across the years, that is a percentage of your rent that simply never arrives. Setting it to zero is equivalent to asserting that you will never have a gap between tenants for as long as you own the property, and nobody believes that when it is stated out loud.

Maintenance and capital expenditure are the same argument on a longer timescale. Capex is the roof, the water heater, the furnace, the flooring — items that fail rarely and cost a great deal when they do. Because they do not bill you monthly, they do not appear in a monthly spreadsheet, and a property can look profitable for six straight years and then hand you a bill that erases all of it. Setting money aside every month for expenses you know are coming is not conservatism, it is accrual accounting, and it is the difference between a rental that pays you and a rental that pays you until it doesn't.

Management is worth entering even if you intend to do it yourself. If you self-manage, that percentage is not saved — it is earned, by you, in exchange for taking calls about a boiler at ten at night. Leaving it out means your cash flow figure is quietly paying you nothing for that labour while claiming the property is profitable. It also means you cannot honestly compare this deal against one you would hire out, and it means the day you get tired and hire a manager, a property that looked like it made money stops doing so. Put the real number in. A deal that only clears with the awkward expenses set to zero has already told you what it is.

Reading the before-and-after comparison

The table beneath the result shows the same property in two states: owned outright with your own cash in it, and owned with the refinance loan against it. It is the clearest way to see what the refinance actually trades. Before the refinance you have a large amount of capital committed, no mortgage payment, and therefore the highest monthly cash flow the property will ever produce. After it, you have most or all of your capital back, a mortgage payment eating into the rent, and less money arriving each month. That is the trade in its entirety: income now, in exchange for the capital to do it again.

Whether that trade is worth making is not something the table can decide for you, because it depends on what you will do with the returned capital. If it goes into another property that also produces cash flow, the strategy compounds and the lower monthly income from this one house is beside the point. If it sits in an account, you have swapped income for a loan and gained nothing. The comparison marks a winner on capital efficiency, with one deliberate exception that is worth knowing about: if the refinanced property has negative cash flow, the all-cash position is marked the winner regardless of how much capital came back. A monthly loss is not a return, and a table that awarded the win to a column showing money going out every month would be the same lie this page was built to avoid.

One last case the comparison makes visible. The loan can exceed everything you spent — cash-out beyond your basis — and the calculator surfaces that as its own line rather than letting it hide inside a negative cash-left figure. It is worth showing separately because it is easy to read as profit and it is not. It is borrowed money. You have not made anything; you have taken a larger loan against an asset, and you now service it every month for as long as you own the property. It may well be the right move, and it is exactly what the strategy is designed to produce. It is simply not income, and the moment you start thinking of it as income, the leverage that made the strategy work starts working in the other direction.