Buy a rental for $400,000, spend $55,000 on renovation and $12,000 on costs, and use a $320,000 short-term loan. After six months the home is worth $620,000. A 75% refinance gives $465,000, returns $145,000 to you and leaves $16,400 of your cash in the deal. Cash flow is about $5,548 a year, a 33.8% return.
What BRRRR means
The letters stand for buy, renovate, rent, refinance and repeat. An investor buys below potential value, improves the home, rents it out, then refinances at the higher value and pulls cash out. The goal is to recover most of the money and put it into the next property.
The all-in cost
The calculator adds the purchase price, the renovation, your buying and refinancing costs, and the interest on the short-term loan. In the example, six months at 9% on $320,000 adds $14,400 of interest, so the all-in cost is $481,400.
Your cash before the refinance is the purchase price plus renovation plus costs plus interest, minus the short-term loan. Here that is $481,400 minus $320,000, or $161,400. The refinance returns $145,000, and $161,400 minus $145,000 leaves $16,400. Forgetting the loan interest is a common mistake, and it makes a deal look better than it is.
The refinance and what stays in
Once the work is finished, a lender values the home and lends a share of it, often up to 75% for a rental. The new mortgage pays off the short-term loan and the rest comes back to you. A low appraisal means less cash returned.
Cash left in the deal is your total cash before the refinance minus the cash you get back. Zero is the ideal, a rental with no money tied up. Anything higher stays locked in until you sell.
The 75% figure is a cap, not a promise. A lender may also test the rent against the new payment before approving the loan, so a high appraisal alone does not guarantee that the full $465,000 is available. Run the deal at 70% as well. At that level the loan is $434,000, and the cash returned falls to $114,000, which leaves $47,400 of your money in the property.
Cash flow and coverage
After the refinance the rent pays the new mortgage. You will see yearly cash flow, cap rate and debt coverage. Lenders often want net income to cover the mortgage about 1.1 to 1.25 times. The example reaches 1.16, which is thin.
Risks worth testing
Renovations run over budget. Appraisals come in low. Rates can rise before you refinance, and finding a tenant can take a while. Lower the value, raise the rate and add a month of vacancy to see whether the deal still holds.
Equity and repeating
The example leaves $155,000 of equity, the value minus the new loan. That is the wealth you keep. Repeating needs returned cash and a lender ready to finance again, and each deal adds another mortgage to your record.
BRRRR in Toronto and Ontario
Toronto prices are high against rents, so many deals look better in smaller Ontario cities. Check local rents and appraisal values before buying. Ontario’s rent rules matter too: a sitting tenant’s rent can rise only by the yearly guideline, which caps the income you can plan for in an older unit.
Timing and lender rules
Some lenders want you to own the property six months or more before they refinance on the new value. Ask early. Private lenders and brokers can tell you the wait, the maximum share of value and the fees, and you can build those into the months and costs you enter.
Where to go next
The rental property calculator gives the long-term picture. Measure your return with the cash-on-cash return calculator and the cap rate calculator. The new loan can be tested in the mortgage refinance calculator.
Frequently asked questions
What does BRRRR stand for?
Buy, renovate, rent, refinance and repeat.
How much cash can I get back?
It depends on the value after renovation and the refinance share, often up to 75%.
What is a good result?
Little or no cash left in the deal, with positive cash flow.
Why does the appraisal matter?
The refinance loan is a share of the value the lender accepts.
Does the calculator include income tax?
No. Rental income and gains are taxable.
What is debt coverage?
Net operating income divided by the yearly mortgage payments.
Sources and updates
Last reviewed: . Full disclaimer. How we build calculators. Editorial policy.
Estimate only. This calculator gives general information for planning. It is not tax, legal or financial advice, and it is not affiliated with the City of Toronto, MPAC or the Canada Revenue Agency. Results depend on the numbers you enter and may differ from official amounts. Check official sources or a qualified professional before you decide.