BRRRR underwriting is a chain. A weak purchase price, rehab budget, rent estimate, appraisal assumption, or refinance term can break everything downstream. Model the exit before committing to the entry.
Map every phase of the deal
Start with acquisition cash, financing, closing costs, rehab, holding costs, and contingency. Then model stabilized rent and operating expenses. Only after the stabilized property is understood should you calculate the refinance.
Keeping phases separate prevents rehab draws, carrying costs, or refinance closing costs from disappearing inside a single vague investment number.
Use a conservative after-repair value
The refinance is usually limited by both loan-to-value and lender underwriting. An optimistic ARV can make every output look strong, so connect it to recent comparable sales and show a downside case.
If a $240,000 ARV at 75% LTV implies a $180,000 new loan, subtract the payoff and refinance costs before calling the remaining cash a return of capital.
Measure cash left in the deal
Cash left in the deal is total cash invested minus net refinance proceeds. That amount—not the original down payment—becomes the basis for post-refinance cash-on-cash return.
A deal that leaves more cash invested is not automatically bad if it produces durable income and equity. The metric should inform the strategy, not replace judgment.
- Run lower-ARV and higher-rehab scenarios.
- Confirm the stabilized rent supports the new debt service.
- Include refinance fees and seasoning requirements.
PropLurk keeps assumptions and outputs together so you can test the downside before moving a deal into your pipeline.
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