BRRRR Cash-Out Refinance Example: Calculate Cash Back and Cash Left In
Walk through a BRRRR cash-out refinance example and learn how ARV, LTV, rehab cost, loan payoff, closing costs, and DSCR affect capital recovery.
Last reviewed: 2026 · 8 min read
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How a BRRRR Cash-Out Refinance Works
In a BRRRR deal, the cash-out refinance is the step where created equity can be converted back into usable capital. After buying, rehabbing, and renting the property, the investor refinances based on the new appraised after-repair value instead of the original purchase price.
The key question is not simply how much cash comes back. The better question is how much cash remains in the deal after refinance costs, existing loan payoff, and the new mortgage payment are considered.
Core BRRRR Refinance Formula
Cash Left In = Total All-In Cost - Refinance Proceeds After Payoff and Closing Costs
Total all-in cost includes purchase price, purchase closing costs, rehab budget, contingency, holding costs, and refinance costs if you want a conservative estimate.
Refinance proceeds usually start with ARV multiplied by lender loan-to-value. From that amount, subtract any existing loan payoff and refinance closing costs.
Worked BRRRR Refinance Example
Assume purchase price is $140,000, purchase closing costs are $4,000, rehab plus contingency is $42,000, and holding costs are $6,000. Total all-in cost is $192,000.
After rehab, the property appraises at a $260,000 ARV. If the lender allows a 75% cash-out refinance, the new maximum loan is $195,000. If refinance closing costs are $5,000 and there is no existing loan payoff because the property was bought with cash, net refinance proceeds are $190,000.
Cash left in the deal is $192,000 minus $190,000, or $2,000. This is near-full capital recovery, but the deal still needs to pass the post-refinance cash flow and DSCR test.
Post-Refinance Cash Flow Check
A BRRRR refinance can look successful because it returns cash, but the new loan can still create weak cash flow. If the refinanced mortgage payment is too high, the property may not support itself.
After estimating refinance proceeds, calculate rent minus vacancy, operating expenses, and the new debt payment. Then check DSCR by dividing annual NOI by annual debt service.
Common Reasons Capital Recovery Falls Short
- The appraisal comes in below the expected ARV.
- The lender uses a lower refinance LTV than expected.
- Rehab costs or holding costs run over budget.
- Refinance closing costs are ignored in the first estimate.
- The new loan payment hurts cash flow or DSCR.
Frequently Asked Questions
What is a BRRRR cash-out refinance?
It is a refinance after rehab and rent stabilization where the new loan is based on the property value after improvements. The investor may recover some or all invested capital as loan proceeds.
Can a BRRRR refinance recover all of my cash?
It can, but full recovery depends on purchase discount, rehab budget, ARV, lender LTV, refinance costs, loan payoff, and whether the property still cash flows after the new debt payment.
Educational Disclaimer
All calculations are estimates for educational and planning purposes only. PropertyFlowTools.com does not provide financial, tax, legal, lending, or investment advice. Verify calculations and consult qualified professionals before making property or financing decisions.