Every BRRRR deal looks great on paper. That's because paper doesn't include the three assumptions that kill returns: ARV, rehab, and refi rate.
The honest sensitivity table
| Assumption | Optimistic | Base | Stressed |
|---|---|---|---|
| ARV | $320K | $305K | $285K |
| Rehab | $52K | $60K | $72K |
| Refi rate | 7.25% | 7.8% | 8.5% |
If your deal still cash-flows in the stressed column, it's a real deal. If it only works optimistic, it's a bet on the market, not on the property.
The "cash left in" number
BRRRR is about pulling capital back out. If you leave more than 20% of your all-in basis in the deal after refi, you don't have a BRRRR — you have a slow SFR rental with a rehab burden. That's fine if the cash-on-cash is strong, but call it what it is.
What most spreadsheets skip
- Capex reserve (assume 5–10% of rent).
- Holding costs during rehab (utilities, taxes, insurance, financing).
- Refi points and closing costs (2–3% of the new loan).
- Vacancy at 8%, not 5%, if you're managing yourself the first year.
Fill your next deal into the [BRRRR Deal Analyzer](/rental-investment-analysis) — the sensitivity block is built in.