BRRRR Strategy Deal Analyzer

Enter your deal numbers to see whether the BRRRR math works: how much cash you recover from the refinance, your ongoing cash flow and cash-on-cash return, and the Year-1 depreciation tax benefit — including cost segregation if you plan to do a study.

How to use this calculator

The BRRRR method (Buy, Rehab, Rent, Refinance, Repeat) is a capital recycling strategy: you buy a distressed property, renovate it to its ARV, rent it out, then do a cash-out refinance at 75–80% of ARV. If the refinance proceeds cover what you put in, you've recycled your capital into a performing rental with little or nothing left in the deal. The calculator answers four questions:

1. Did you get your money back?

The single most important BRRRR metric is cash left in the deal. If you put in $200K total and the refinance returns $195K, you have $5K left in a rental property that will (hopefully) cash flow and appreciate. If the refinance returns $210K, you have negative cash left — you effectively got paid $10K to own a rental, and that capital can fund the next deal. The goal: minimize cash left in, without over-leveraging or buying a bad property.

2. What's the ongoing cash flow?

In the current rate environment (7–8% on investment property loans), many BRRRR deals are slightly negative cash flow — especially in the first year. That doesn't automatically make them bad deals. The analysis depends on:

• Appreciation upside. A deal that costs $200/month in negative cash flow but appreciates $12K/year (on a $300K ARV at 4%) still produces a real economic return.
• Depreciation offset. Year-1 depreciation deductions can create a paper loss that offsets other income — worth thousands in actual tax savings — even while the deal runs slightly cash-flow negative.
• Loan paydown. Your tenant is paying down the mortgage. After 5 years on a 30-year loan at 7.5%, you've paid off roughly 4–5% of the principal — real equity, even if cash flow is thin.

3. What's the depreciation tax benefit?

Every residential rental property is depreciated over 27.5 years on a straight-line basis (IRC § 168(c)). On a $250,000 ARV with 20% land ($200K depreciable basis), that's $7,273/year in non-cash deductions — $2,327 in actual tax savings at a 32% marginal rate. If you do a cost segregation study on the rehab work and resulting property, you reclassify 20–30% of building value into 5-year and 7-year personal property components, which qualify for 100% bonus depreciation under the OBBBA (property placed in service after January 19, 2025). On that same $250K property with 25% cost seg allocation, Year-1 total deductions jump to $55,455 — a $17,745 tax bill reduction, more than offsetting the cost of the cost seg study itself on a typical deal.

Whether those deductions are usable this year depends on your participation status:

• REPS (Real Estate Professional Status): Rental losses are non-passive and fully deductible against all income, no limit.
• Active participation: Up to $25K of rental losses deductible per year (phases out at $100K–$150K AGI under IRC §469(i)).
• Passive: Losses suspended and carried forward until you have passive income, sell the property, or qualify for REPS.

4. What's the equity picture over time?

BRRRR builds wealth through three simultaneous mechanisms: appreciation on the ARV (which you've engineered by forcing value through rehab), loan paydown by tenants, and depreciation tax savings. The 5-year equity table combines the first two so you can see the trajectory.

Common BRRRR mistakes this calculator helps you catch

• Overpaying for the rehab. If your reno budget is too high relative to the value it adds, the ARV won't support a refinance that gets your capital back. Enter conservative ARV numbers.
• Underestimating costs. Holding costs during rehab (hard money interest, utilities, taxes while vacant), stabilization costs (lease-up vacancy), and refinance costs all eat into your cash-out proceeds. This calculator makes those explicit.
• Ignoring negative cash flow exposure. If you're relying on cash flow to service debt, a few months of vacancy can cause real problems. Know your break-even occupancy rate before closing.
• Not modeling the tax benefit. Many investors leave the cost segregation decision off the table because they don't realize how large the Year-1 benefit is. A $300K BRRRR with a $5,000 cost seg study could generate $18,000 in year-1 tax savings at a 32% bracket — a 360% ROI on the study fee alone.