How to Analyze BRRRR Deals

Calculate acquisition costs, rehab budget, refinance cash out, projected cash flow and long-term returns for BRRRRs.

Cindy Bellford avatar
Written by Cindy Bellford
Updated over a week ago

BRRRR stands for buy, rehab, rent, refinance & repeat, and is a popular investment strategy among investors that can help you minimize the capital invested in each property.

Unlike traditional rental properties, the BRRRR strategy involves using a short-term loan (typically an interest-only, hard-money loan) to finance the acquisition and rehab of a property, then refinancing into an amortizing long-term loan after the rehab is complete.

This guide will show you how DealCheck's BRRRR calculator will help you analyze the entire BRRRR lifecycle, from property purchase and rehab, to refinancing and long-term cash flow.

Adding a New Property

Step 1: Click the "Add Property" Button from the Property List

Navigate to the BRRRRs list and click the Add Property button at the top right:

New BRRRR property button in the property list


Step 2: Select the "Enter Manually" Option

Our software allows you to import property data from public records or copy an existing property, but in this tutorial, we'll add the property manually and explain all of the parameters you can customize along the way.

Select the Enter Manually option to launch the step-by-step wizard:

New BRRRR property wizard - enter manually button

Tip: you can save a lot of time by customizing your property templates and using one of them when adding new properties. Read this guide to learn how to do this.


Step 3: Fill in the Property Description

The first step is to enter basic details about the property, including a name, property type and address. All of the fields here are optional, so you can fill in as many details as you want:

New BRRRR property wizard - property description

Here are the most important fields to fill in:

  • Name: this will be the name of the property used throughout our app. Some people simply use the property's address, while others like more creative names, like "2/1 Condo in South Beach, Excellent Condition"

  • Tags & Labels: you can add custom tags and labels to this property to help you categorize it, track its status and quickly find it later

  • Address: enter the address of the property to view it on the map, look up sales & rental comps, as well as to access its public records later

  • Property Type: select the type of the property from the available options. This field is important, as it will enable or disable other fields based on your selection

  • Description: enter any of the basic home attributes that you know about this property, including bedrooms, bathrooms, square footage, year built, parking, etc.

Click the Next Section button at the bottom of the page to continue:

New BRRRR property wizard - property description next button


Step 4: Enter the Purchase & Rehab Information

The next section goes over the property purchase and rehab:

New BRRRR property wizard - purchase and rehab

Here is what you should customize:

  • Purchase Price: the amount you're paying to purchase this property

  • After Repair Value: the estimated market value of the property after the rehab work is complete. This will be used to calculate the refinance loan information

  • Financing (Purchase): if you're going to use financing to purchase and rehab this property, enter the details of your loan in this section, including the loan type, interest rate, and term. Disable financing if this is a cash purchase

  • Purchase Costs: these are all costs and fees associated with purchasing the property, also called closing costs. Examples include loan points, escrow fees and property inspection fees. You can enter a total amount as a percentage of the purchase price, or click the Itemize button and enter a detailed list of each purchase cost separately

Next, use the Rehab Costs section to customize your rehab budget for this project:

New BRRRR property wizard - rehab costs

First, you'll want to customize your rehab items and costs.

Although you can enter a total rehab dollar amount, you'll most likely want to itemize and break down your rehab budget. Click the Itemize button and enter all of your anticipated scope of work items in the provided worksheet:

New BRRRR property wizard - rehab costs itemized list

Tip: see this guide to learn how to create reusable rehab budgets and scope of work templates to help you quickly analyze new projects.

You can also customize these additional rehab fields:

  • Cost Overrun: this is the anticipated increase of the rehab budget beyond the originally planned amount. Think of it as a safety buffer in case you have unexpected expenses

  • Holding Period: enter the amount of time you anticipate it will take to finish the rehab and sell this property

Note: the holding costs during the rehab phase will be automatically calculated for you based on the Operating Expenses you'll enter later.

Click the Next Section button at the bottom of the page to continue:

New BRRRR property wizard - purchase and rehab next button


Step 5: Enter the Refinance Information

Use the Refinance section to enter the details of the long-term loan you will be using, as well as the refinance costs you expect to pay:

New BRRRR property wizard - refinance

Customize the following:

  • Financing (Refinance): enter the details of your long-term loan in this section, including the loan type, interest rate, term and any mortgage insurance

  • Refinance Costs: these are all costs and fees associated with refinancing the property, also called closing costs. Examples include loan points, appraisal fees and recording fees. You can enter a total amount as a percentage of the ARV, or click the Itemize button and enter a detailed list of each refinance cost separately

 Click the Next Section button at the bottom of the page to continue:

New BRRRR property wizard - refinance next button


Step 6: Enter the Rent & Expenses Information

Use the Rent & Expenses section to enter the projected rent you're going to collect from your tenants, your operating expenses, as well as long-term projections:

New BRRRR property wizard - rent and expenses

First, customize the rental income:

  • Gross Rent: the total gross rent you expect to collect from your tenants. You can also change the rent collection period, which is useful for analyzing short-term BRRRR rentals like Airbnb's

  • Vacancy: enter the percentage of time you expect the property to remain vacant

  • Other Income: use this to enter any miscellaneous income you expect to receive from this property, like storage rental, coin-operated laundry or parking fees. You can enter a monthly total or itemize the list

Next, customize the monthly and yearly recurring expenses. You can enter an estimate as a percentage of the gross rent (useful if you're doing a quick analysis using the 50% Rule), or itemize the expenses to get more accurate projections:

New BRRRR property wizard - operating expenses

When itemizing expenses, you have several options for how to enter each item:

  • A monthly or yearly amount: good for fixed costs

  • A percentage of the purchase price: for things like property taxes

  • A percentage of the gross rent: for maintenance, management or capital expenditures. You can choose to calculate these items either before the vacancy is subtracted from the gross rent, or after

You'll also see a BRRRR Phase toggle for each operating expense. Use this to select during which phase(s) of the BRRRR cycle (rehab or rental) you will pay this expense.

The final section of the wizard has several additional inputs and projections you can customize to further fine-tune this deal:

New BRRRR property wizard - long-term projections

Here is an overview of what each of them is for:

  • Appreciation: the anticipated annual increase of the property's market value. This is important to calculate how the property's value will increase in the future

  • Income Increase: the anticipated annual increase of the gross rent and any other income. In most cases, the property's rent will increase each year and this is the percentage it will increase by

  • Expense Increase: the anticipated annual increase of the operating expenses. Expenses will typically rise due to inflation and other factors

  • Selling Costs: an estimate of the costs and fees associated with selling this property, also called closing costs. We use this as part of the ROI calculation

  • Depreciation: use the provided inputs to customize the depreciation deduction for this property, including the depreciation period and the property's land value. You can also turn off depreciation if it's not applicable to this property

When finished, click the Save Property button at the bottom of the page to add this property to your dashboard:

New rental property wizard - save property button

Viewing the Property's Analysis

Now that you've added this property, you can view a full breakdown of the purchase & rehab information, holding costs, refinance cash out, cash flow and investment returns on the Property Analysis page:

BRRRR property analysis page

Tip: hover over the question mark icons next to any metric to view their descriptions and calculation formulas.

If you need to edit any of the parameters of this deal later, go to the Purchase Worksheet page from the property menu on the left side:

Purchase worksheet link in property menu


Adjusting the Length of the Rehab

One of the factors affecting your total invested cash (and your long-term returns) for a BRRRR deal is the holding period - the length of time it will take to rehab the property. Longer holding periods will increase your expenses and decrease your returns.

You can quickly adjust the holding period of your BRRRR from the Property Analysis page by dragging the slider above the Holding Costs section:

Holding period timeline slider

As you do this, you'll notice the holding costs, invested cash and returns adjusting as well. If you find a new holding period you're happy with, you can quickly save it by clicking on the save button to the right of the slider:

Save holding period button


Viewing Long-Term Buy & Hold Projections

While the Property Analysis page shows the numbers for the first year, you may want to see how this BRRRR property will perform in the future as well.

Click the Buy & Hold Projections link from the menu on the left side to view cash flow projections for up to 35 years into the future:

Buy and hold projections link in property menu

By default, this page will show projected numbers for years 1, 2, 3, 5, 10, 20 and 30. You can view projections for other years by opening the dropdown at the top right:

Buy and hold projections for a BRRRR property

Tip: scroll the table left and right to view information for additional years.

What's Next?

Once you've added a new BRRRR property, it will remain in your account and you can come back to it at any time from the property list:

BRRRR property list

Here are some other things you can do with this property:

Note: the above screenshots were taken from our website, but the same features can be found in our iOS and Android apps as well.

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