BRRRR Deal Breakdown & Cash-on-Cash Confusion – Need Help!

BRRRR Deal Breakdown & Cash-on-Cash Confusion – Need Help!

Pankil P. PatelPro Member
Rental Property Investor · Walpole, MA · Member since 2018 · 26 posts · 7 votes

Deal Breakdown & Cash-on-Cash Confusion – Need Help!

I am evaluating a real estate deal using BRRRR calculator and need help understanding why my cash-on-cash return (CoC) appears as infinity (∞%), even though I have actual cash invested. Here’s the breakdown:

Financing & Investment Details:

  • Total Project Cost: $750,000
    • Purchase Price: $450,000
    • Rehab Cost: $300,000
  • Total Investment Needed: $750,000
    • Private Money Loan: $550,000 (1-year term at 9% interest)
    • My Cash Investment: $200,000
  • Interest for Private Money Loan: $49,500
  • Closing Costs for Private Money Loan: $0
  • Closing Costs for Refinance: $27,000

Total Cash in the deal: $750,000 + $49,500 + $27000 = $826,500

Exit & Refinancing:

  • ARV: $900,000
  • After renovation, I refinance at a new loan of ~$675,000.
  • This allows me to pay off the private loan (~$550K principal + $49,500 interest).
  • After refinancing, I walk away with $75,000 in cash but still have $152,000 of my own capital left in the deal ($200K + $27K - $75K).

The Issue:

When I calculate cash-on-cash return, it shows ∞%, but I know I still have capital tied up ($152K).

What am I doing wrong in my calculations? Why is my CoC returning infinity when I still have money left in the deal? Any insights would be greatly appreciated!

0Reply
47 views

5 Replies

Jump to latestLatest
  • Jaycee GreenePro Member
    Real Estate Consultant · St. Louis MSA · Member since 2024 · 3k+ posts · 728 votes
    1y
    Quote from @Pankil P. Patel:

    Deal Breakdown & Cash-on-Cash Confusion – Need Help!

    I am evaluating a real estate deal using BRRRR calculator and need help understanding why my cash-on-cash return (CoC) appears as infinity (∞%), even though I have actual cash invested. Here’s the breakdown:

    Financing & Investment Details:

    • Total Project Cost: $750,000
      • Purchase Price: $450,000
      • Rehab Cost: $300,000
    • Total Investment Needed: $750,000
      • Private Money Loan: $550,000 (1-year term at 9% interest)
      • My Cash Investment: $200,000
    • Interest for Private Money Loan: $49,500
    • Closing Costs for Private Money Loan: $0
    • Closing Costs for Refinance: $27,000

    Total Cash in the deal: $750,000 + $49,500 + $27000 = $826,500

    Exit & Refinancing:

    • ARV: $900,000
    • After renovation, I refinance at a new loan of ~$675,000.
    • This allows me to pay off the private loan (~$550K principal + $49,500 interest).
    • After refinancing, I walk away with $75,000 in cash but still have $152,000 of my own capital left in the deal ($200K + $27K - $75K).

    The Issue:

    When I calculate cash-on-cash return, it shows ∞%, but I know I still have capital tied up ($152K).

    What am I doing wrong in my calculations? Why is my CoC returning infinity when I still have money left in the deal? Any insights would be greatly appreciated!

    @Pankil P. Patel Your down payment is listed as $0, that's why.

  • Pankil P. PatelPro Member
    OP
    Rental Property Investor · Walpole, MA · Member since 2018 · 26 posts · 7 votes
    1y

    Thank you Jaycee. 

    Purchase Loan Details section would not allow me to select Down payment AND also loan amount. My scenario is that I am putting $200K of my own cash and bring loan of $550K to cover purchase and rehab cost. Do you know how do I input this value to get accurate numbers?

  • Jaycee GreenePro Member
    Real Estate Consultant · St. Louis MSA · Member since 2024 · 3k+ posts · 728 votes
    1y

    @Pankil P. Patel I run things like this through my own proforma, so sorry, I don't know what to do with BPs calculator.

  • Pankil P. PatelPro Member
    OP
    Rental Property Investor · Walpole, MA · Member since 2018 · 26 posts · 7 votes
    1y

    No problem, I appreciate you looking into this. Thanks. 

  • New to Real Estate · Chicago · Member since 2023 · 46 posts · 22 votes
    1y

    Did you try chatgpt? It's pretty accurate with such calculations, and will immediately point out if you're missing any datapoints. In this case specifically, I think you would need to enter the rental estimate to calculate tge return right? 🤔

Join the conversationCreate a free account to reply, vote on answers and follow this thread.