How it works
The BRRRR refinance is the step that turns one renovation into a repeatable system: an appraiser confirms the after-repair value, a lender offers a fraction of it — classically 75% — and the new loan retires the old one, with any surplus wired back to you as cash-out. Whether that surplus actually recycles your capital decides everything. The math stacks four numbers: maximum new loan equals ARV times LTV; gross cash-out equals that loan minus the balance being paid off; closing costs, charged on the entire new loan, shave the wire down to net cash-out; and net cash-out minus everything you have deployed leaves the cash still trapped in the deal. A true BRRRR lands at zero or below — the property carries itself and your money moves on. Watch the second-order effect this calculator makes visible: borrowing the full 75% raises the payment, and a property whose rent cannot clear the new debt service forces you to feed it monthly from the very capital you just pulled out. Appraisal day is where paper ARVs meet evidence, so underwrite from closed comparables rather than hope.
Formula
Max loan = ARV × LTV | Net cash out = max loan − payoff − closing% × max loan | Cash left = deployed − net cash out
Tips
- Order the appraisal only once closed comps support your ARV — surprises strand capital.
- Above 80% LTV expect mortgage insurance or pricing hits that erode the pull-out.
- Refi closing costs ride on the entire new loan; a 2-point cost is real money at scale.
- Stress-test the new payment against 90% of rent before committing to maximum LTV.
- Seasoning rules vary by lender — ask how long between purchase and refinance they require.
Frequently asked questions
- How much cash can a BRRRR refinance pull out?
- ARV times lender LTV, minus your old loan payoff and refi closing costs. On a $290,000 ARV at 75% LTV with a $150,000 payoff and 2% costs, a $217,500 loan nets back about $63,150. Whether that covers the $65,000 you deployed decides whether the deal truly recycled.
- What LTV do lenders allow on a BRRRR cash-out refinance?
- Investment-property cash-out typically caps near 70–75% of appraised value, though some portfolio lenders stretch toward 80% at pricing pain. Higher LTV pulls out more cash but raises the payment — model both sides, because the biggest loan is rarely the best one for cash flow.
- Why did my BRRRR refinance leave cash stuck in the deal?
- Usually one of three leaks: the appraisal came in under pro-forma ARV, rehab overran budget, or closing costs ate more than modeled. Each shortfall dollar stays locked until a future refinancing or sale, which is why disciplined operators carry a 10–15% rehab contingency from day one.
- Does cash-out from a refinance count as taxable income?
- Generally no — loan proceeds are debt rather than income however you spend them; confirm specifics with a CPA. The tax event waits until sale, and added basis conversations belong with that professional too. What the cash does change is leverage: the money is owed back regardless of what rent does.
- What if rent barely covers the new BRRRR payment?
- Then the refinance is oversized, not the deal broken. Requesting $15,000–$20,000 less trims the payment meaningfully while leaving most of your capital recycled. A BRRRR stranding $5,000 but flowing $250 a month beats a maximally extracted one bleeding $100 every month indefinitely.