BRRR Calculator Question

1 Reply

Hey BP folks!

I'm currently working on the projections of a fourplex property in New Orleans using the BRRR calculator on BP. I'm writing here because I'm confused why the BRRR calculator doesn't seem to assume that you're financing the estimated repairs along with the initial loan amount. Specifically, according to my lender, all I will need at closing is the down payment plus closing costs. But the BRRR calculator says that I will need the down payment, closing costs, and estimated repair costs, equaling the 'Total cash needed at purchase'.  

Can someone explain whether or not the BRRR strategy typically includes the ability to finance the cost of the renovation along with the initial loan for the purchase? This was my original understanding but the online calculator seems to show something different.

Thanks for the help!

Most lenders will not give you money up-front for renovations.  They will typically have a schedule of milestones for the rehab.  They will give you money for the milestone after you complete it and they approve it. In other words, you are going to put up the money first and get reimbursed for it after.