function calculateBRRRR() {
var purchase = parseFloat(document.getElementById('purchasePrice').value) || 0;
var rehab = parseFloat(document.getElementById('rehabCosts').value) || 0;
var arv = parseFloat(document.getElementById('arv').value) || 0;
var ltv = (parseFloat(document.getElementById('ltv').value) || 0) / 100;
var rent = parseFloat(document.getElementById('monthlyRent').value) || 0;
var expPct = (parseFloat(document.getElementById('expenses').value) || 0) / 100;
var rate = (parseFloat(document.getElementById('interestRate').value) || 0) / 100 / 12;
var term = (parseFloat(document.getElementById('loanTerm').value) || 0) * 12;
var totalCost = purchase + rehab;
var newLoan = arv * ltv;
var cashLeft = totalCost – newLoan;
var equity = arv – newLoan;
var noi = rent * (1 – expPct);
var monthlyPI = 0;
if (rate > 0) {
monthlyPI = newLoan * (rate * Math.pow(1 + rate, term)) / (Math.pow(1 + rate, term) – 1);
} else {
monthlyPI = term > 0 ? newLoan / term : 0;
}
var cashFlow = noi – monthlyPI;
var annualCashFlow = cashFlow * 12;
var roi = (cashLeft > 0) ? (annualCashFlow / cashLeft) * 100 : 0;
document.getElementById('resTotalCost').innerText = '$' + totalCost.toLocaleString(undefined, {minimumFractionDigits: 0, maximumFractionDigits: 0});
document.getElementById('resLoanAmount').innerText = '$' + newLoan.toLocaleString(undefined, {minimumFractionDigits: 0, maximumFractionDigits: 0});
document.getElementById('resCashLeft').innerText = (cashLeft < 0 ? 'Infinite (Cash Out $' + Math.abs(cashLeft).toLocaleString() + ')' : '$' + cashLeft.toLocaleString());
document.getElementById('resCashFlow').innerText = '$' + cashFlow.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resEquity').innerText = '$' + equity.toLocaleString(undefined, {minimumFractionDigits: 0, maximumFractionDigits: 0});
document.getElementById('resROI').innerText = (cashLeft <= 0 ? 'Infinite' : roi.toFixed(2) + '%');
document.getElementById('results').style.display = 'block';
}
Understanding the BRRRR Method
The BRRRR (Buy, Rehab, Rent, Refinance, Repeat) method is a powerful real estate investment strategy that allows investors to build a portfolio of rental properties with limited capital. By adding value to a distressed property and refinancing based on the new appraised value, you can often "pull your initial capital back out" to fund the next deal.
The 5 Steps of BRRRR
- Buy: Purchase a distressed property that needs work at a discount.
- Rehab: Renovate the property to make it safe, functional, and attractive to renters.
- Rent: Secure high-quality tenants to generate monthly income.
- Refinance: Get a long-term commercial or residential loan based on the After Repair Value (ARV).
- Repeat: Use the cash proceeds from the refinance to purchase your next property.
Example Calculation
Imagine you buy a house for $100,000 and spend $30,000 on renovations. Your total investment is $130,000. If the property's new value (ARV) is $180,000, a bank offering a 75% LTV loan will lend you $135,000. This pays back your entire $130,000 investment plus gives you $5,000 in cash, while you still own the property and collect monthly rent!
Key Metrics Explained
Cash Left in Deal: This is the most critical metric for the "Repeat" phase. The less cash you leave in the deal, the higher your Cash-on-Cash return and the faster you can scale.
Net Operating Income (NOI): Your gross rent minus operating expenses like taxes, insurance, maintenance, and property management. It does not include your mortgage payment.
Equity Created: The difference between the ARV and your new loan amount. This represents your "unlocked" wealth in the property.