BRRRR Strategy Analyzer

Input Parameters

Processing Methodology

Step 1 — Acquisition Cost Calculation.

```

Total Cash In = Down Payment + Rehab Cost + Acquisition Closing Costs

Down Payment = Purchase Price × Down Payment %

Acquisition Closing Costs = Purchase Price × Closing Costs %

```

Step 2 — Stabilized Monthly Income and Expense Analysis.

```

Effective Gross Rent = Target Rent × (1 − Vacancy Rate %) [default: × 0.90]

Conservative Rent Applied = Market Rent × 0.90 [90% of market rent]

Vacancy Cost = Target Rent × Vacancy Rate % [default: 10%]

Monthly Expenses:

Property Tax (Monthly) = Annual Tax ÷ 12

Insurance (Monthly) = Annual Insurance ÷ 12

Management Fee = Effective Gross Rent × Management Fee % [default: 8%]

Maintenance Reserve = Effective Gross Rent × Maint. Reserve % [default: 8%]

Loan P&I = Calculated from refinance loan terms

Monthly Cash Flow = Effective Gross Rent − All Monthly Expenses

NOI (Annual) = (Effective Gross Rent − OpEx [excl. debt service]) × 12

DSCR = NOI ÷ Annual Debt Service

```

Step 3 — BRRRR Refinance Analysis.

```

Post-Rehab Appraised Value = ARV

Refinance Loan Amount = ARV × Refinance LTV %

Cash Out at Refinance = Refinance Loan Amount − Any Existing Acquisition Loan Balance

Net Cash Remaining in Deal = Total Cash In − Cash Out at Refinance − Refinance Closing Costs

Cash Recycling % = Cash Out ÷ Total Cash In × 100%

```

Step 4 — BRRRR Score Evaluation.

BRRRR Score = Composite rating across all four criteria. Worst individual score determines overall classification.

Step 5 — 5-Year Projection.

For each year, the model calculates:

• Beginning equity position

• Rental income (with annual growth)

• Total operating expenses

• Net cash flow

• Mortgage paydown (principal portion)

• Appreciation gain

• Total return (cash flow + equity gain)

• Cumulative return on investment

Output Format

BRRRR Analysis Summary:

```

Property: 1847 W Elm St, Tempe AZ 85281

Purchase Price: $165,000 | Rehab: $89,620 | ARV: $312,500

Market Rent: $2,100/mo | Conservative Rent Applied: $1,890/mo (90%)

Refinance: 75% LTV at 7.25% on $234,375 | Monthly P&I: $1,599

BRRRR Refinance Analysis:

Total Cash In: $283,370 (purchase + rehab + closing costs)

Refinance Loan: $234,375

Cash Out: $234,375 (assumes cash purchase acquisition)

Net Cash Remaining in Deal: $49,995 (residual after refi)

Cash Recycling: 82.8% ← ACCEPTABLE

Monthly Cash Flow Analysis:

Effective Gross Rent: $1,890

Property Tax: ($312)

Insurance: ($125)

Management (8%): ($151)

Maintenance Reserve (8%): ($151)

Mortgage P&I: ($1,599)

─────────────────────────────

Monthly Cash Flow: ($448) ← NEGATIVE ⚠

DSCR: 0.94 ← BELOW 1.0 (lender minimum) ⚠

Cash-on-Cash Return: N/A (negative cash flow)

BRRRR Score: NOT RECOMMENDED (negative cash flow; DSCR below 1.0)

```

This example illustrates a deal where the BRRRR refinance math works (82.8% cash recycling) but the resulting cash flow is negative — a critically important finding that a simple spreadsheet model might miss. The tool correctly flags this as Not Recommended.

5-Year Projection Table:

Conservative Bias Methodology

1. 90% of Market Rent. Rather than using the target rent at face value, the tool automatically reduces it to 90% before calculating cash flow. This accounts for: (a) the uncertainty in rent estimates, (b) the reality that properties sometimes rent for less than the initial estimate, and (c) small periodic vacancies between tenant changes that are not captured in the standard vacancy rate.

1. 10% Vacancy (Not 5%). The industry standard used in many pro forma models is 5% vacancy. The BRRRR Analyzer defaults to 10% because single-family rental properties typically experience 1–2 month vacancies between tenants in most markets. A 10% vacancy rate applied to a 12-month year equals approximately 1.2 months of lost rent — a realistic expectation.

1. 8% Management Fee — Even If Self-Managed. This is perhaps the most important conservative input in the model. Self-management is not free — it has real time value, and most investors who start self-managing eventually move to professional management as their portfolio grows. Underwriting with 0% management fee sets a false expectation. The tool includes 8% regardless of the management intent input.

1. DSCR Below 1.0 = Automatic NOT RECOMMENDED. A debt service coverage ratio below 1.0 means the property's income does not cover its debt service. This is a hard stop — no lender will refinance a property with negative DSCR, and holding a negative-cash-flow property destroys the capital base needed to continue the BRRRR cycle. The tool flags this condition prominently and classifies any deal with DSCR < 1.0 as Not Recommended regardless of other metrics.

1. Minimum Vacancy Override: 5%. The vacancy rate can be adjusted by the user but has a hard floor of 5%. The tool will not model 0% vacancy because no rental property is ever 100% occupied indefinitely.

CRM Integration

• Creates or updates Property record with BRRRR analysis results

• Populates: MonthlyCashFlow, DSCR, CoCReturn, BRRRRScore, CashRecyclingPct, Residual_Capital

• Attaches full 5-year projection table as note

• If DSCR < 1.0 or BRRRR Score = NOT RECOMMENDED: creates task "Review deal before proceeding" assigned to portfolio manager