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Rehab / ARV Calculator

Model your BRRRR deal from acquisition through DSCR refinance — cash recycled, equity captured, and every dollar in between.

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Rehab / ARV

Model your BRRRR deal

Acquisition

$
$

Lender fees, title, etc.

Rehab & holding

$
$

HM int + tax + ins + util

DSCR refi

$

Appraiser's post-rehab value

%

DSCR typical: 70–75%

%
%

Deal summary

Cash recycled

-$21,825

Capital not fully recovered — money left in deal

All-in cost
Purchase price
$180,000
Rehab budget
$50,000
Holding costs
$7,200
Closing costs in
$4,000
Total cash in
$241,200
DSCR refi
ARV
$300,000
Refi loan (75% LTV)
$225,000
Refi closing costs
($5,625)
New P&I /mo (30 yr)
$1,535
Capital position
Cash recycled (refi net − all-in)
-$21,825
Cash left in deal
$21,825
Equity captured (ARV − refi)
$75,000
ARV spread %
24.4%

Cash recycled = net refi proceeds minus total cash in. A positive number means the refi returned more than your total investment — the BRRRR "infinite return" scenario. A negative number means you still have equity tied up in the deal. Both can be winning outcomes; it depends on your goals.

After the refi — verify DSCR

The new DSCR refi loan creates a permanent monthly P&I obligation. Before closing, plug your new loan amount, rate, taxes, and insurance into the DSCR Calculator to confirm the stabilized rental income covers the new payment at the lender's required DSCR.

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The BRRRR strategy and ARV

BRRRR — Buy, Rehab, Rent, Refinance, Repeat — is the most capital-efficient strategy in residential real estate investing. The goal: buy a property below market value, force appreciation through renovations, stabilize with a tenant, then refinance at the new (higher) appraised value to pull out all or most of your invested capital.

The DSCR loan is the engine of the "Refinance" step. Once the property is stabilized and rent is in place, a DSCR lender appraises the renovated property, lends 70–75% of that appraised value (the ARV), and the proceeds pay off your construction financing. If the math works, you leave with equity and recycled capital.

The BRRRR math in detail

  1. All-in cost: purchase + rehab + holding costs + closing costs in
  2. DSCR refi loan: ARV × LTV% (typically 70–75%)
  3. Refi proceeds: new loan minus refi closing costs
  4. Cash recycled: refi proceeds minus all-in cost
  5. Cash left in: max(0, all-in − refi proceeds)
  6. Equity captured: ARV minus new refi loan

Worked example — Cleveland value-add SFR

Purchase: $120,000. Rehab: $45,000. Holding (5 months × $1,600/mo): $8,000. Closing in: $3,500. All-in: $176,500.

ARV after renovation: $260,000. Refi at 75% LTV = $195,000 loan. Refi closing at 2.5% = $4,875. Net refi proceeds: $190,125.

Cash recycled: $190,125 − $176,500 = $13,625 out. Cash left in: $0. Equity captured: $260,000 − $195,000 = $65,000.

This is the ideal BRRRR outcome: all capital recycled, equity created, and a cash-flowing DSCR loan in place. The $13,625 becomes part of the next down payment.

ARV risk — the most common BRRRR failure mode

The BRRRR model is sensitivity-driven: a small miss on ARV can flip a "full recycle" deal into a "cash left in" deal quickly. Consider the Cleveland example above if ARV came in at $230,000 instead of $260,000:

New refi loan: $230,000 × 75% = $172,500. Refi closing: $4,313. Proceeds: $168,187. Cash recycled: $168,187 − $176,500 = −$8,313 (cash left in).

The deal still works — you have equity, a cash-flowing property, and a DSCR loan in place. But you didn't pull all your capital out. The "infinite return" narrative doesn't apply here. Budget for a 10–15% ARV miss and make sure the deal still makes sense.

Holding costs — the most underestimated line item

New investors often budget rehab carefully but underestimate holding costs. For a 4-month rehab on a $180,000 hard money loan at 11% with $300/mo in taxes and insurance:

  • Hard money interest: $180,000 × 11% ÷ 12 × 4 = $6,600
  • Taxes + insurance: $300 × 4 = $1,200
  • Utilities (vacant property): $100 × 4 = $400
  • Total holding: $8,200 — often overlooked entirely

Holding costs increase with rehab duration. A 3-month overrun can add $3,000–5,000 in holding costs alone. Contractor delays, permit issues, and material backlogs are the norm, not the exception — budget 1–2 extra months.

Timing the DSCR refinance

After the rehab is complete and the property is rented, you're ready for the DSCR refi. Key timing considerations:

  • Lender seasoning: most DSCR lenders require 3–6 months after the closing of your acquisition before they'll refi. Some allow a simultaneous refi on a cash purchase (delayed financing).
  • ARV stability: the appraiser will need at least 3 comparable sales within the past 6–12 months. In thin markets, a fresh comp might require waiting for market transactions.
  • Lease in place: most DSCR lenders require a signed lease before funding the refi. A vacant property can qualify using Form 1007 market rent, but having a tenant in place is cleaner.

After the refi — close the loop

Frequently asked questions

What is ARV and why does it matter for DSCR loans?

ARV — After-Repair Value — is the appraised market value of a property after all planned renovations are complete. It's the basis for the DSCR refinance loan. DSCR lenders lend a percentage of ARV (typically 70–75%), so a higher ARV means a larger refi loan and more capital recycled back to the investor. ARV is determined by a licensed appraiser using recently sold comparable properties in the same condition.

What does 'cash recycled' mean in the BRRRR model?

Cash recycled = net refi proceeds minus your total all-in cost. If you invested $230,000 total (purchase + rehab + holding + closing) and the refi returned net proceeds of $265,000, you recycled $35,000 more than you put in — your capital is fully out plus you pocketed extra. If the refi only returns $200,000, you have $30,000 still in the deal — that's cash left in.

What holding costs should I include?

Monthly holding costs include: hard money or bridge loan interest, property taxes (prorated monthly), insurance, utilities (water, gas, electric during rehab), and any security or property management fees during renovation. A reasonable all-in holding cost for a standard SFR rehab runs $1,500–2,500/month depending on loan size, local taxes, and utility costs.

What LTV should I use for the DSCR refi?

Most DSCR lenders will fund 70–75% of ARV on a BRRRR-style refinance. 75% is common for DSCR ≥ 1.0 with good credit. Some lenders use 70% as a conservative cap for properties with recent renovation. Plan around 75% as your target, and make sure the deal works at 70% as a worst case.

Do DSCR lenders require seasoning before refinancing out of a hard money loan?

Yes — most require 3–12 months. Many DSCR lenders require 6 months of seasoning after purchase and will use the lesser of the appraised value or your purchase price during the first 6–12 months. If you closed 7 months ago, many lenders will fully use the new ARV. Check with your specific lender — seasoning policy is one of the most variable items in DSCR lending.

What rehab costs should I include?

Everything that's a capital expenditure to prepare the property: contractor labor and materials, permits, structural repairs, system upgrades (HVAC, electrical, plumbing), cosmetic finishes, landscaping, and any soft costs (architect, engineer, permit fees). Do not include ongoing operating expenses that would run during stabilized occupancy — those belong in cash flow analysis, not rehab budget.

How is equity captured calculated?

Equity captured = ARV minus the new DSCR refi loan amount. It's the remaining equity in the property after you've taken out the maximum refi. This equity is illiquid but represents your net worth position in the asset. A BRRRR deal where you recycled all your cash but retained $80,000 in equity is still a win — you have a free-and-clear equity position built from someone else's distress and your rehab skill.

What if the ARV comes in lower than expected?

This is the most common BRRRR risk. If ARV comes in $30,000 below your estimate, your refi loan shrinks by $22,500 (at 75% LTV), meaning $22,500 more of your capital is locked in the deal. Build in a 10–15% ARV haircut in your modeling — if the deal only works at your exact ARV estimate, it's too thin. Model at 90% of projected ARV and make sure you're still happy with the outcome.

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