Calculating ROI with BRRRR strategy.

2 Replies

When calculating ROI with this strategy is it simply NOI/Cash outlay, or should it be this

NOI/(Cash outlay-cash out refi)? So here is an example.

NOI=$325/month 3,900/yr

Cash outlay=62,500k

refinance cash out=40,000k

Would ROI be 3,900/62,500=6.24%

or would it be 3,900/(62500-40,000)=17.33%

One other quick question, if you are doing a live in rehab would it make sense to switch a couple R's in the BRRRR strategy? So should you buy/rehab/REFI/rent/repeat? It may take an extra 6 months of seasoning, but would owner occ terms be worth it?