I have about 5 rental properties and do a mix of LTR/MTR. I have been interested in doing a BRRR so this would be my first time doing so. I'd be using a bridge loan to fund this project and it will cost me about 70K out of pocket (this includes 15% DP, CC, and bridge loan monthly repayments x 4). At the end of this project, I will have two turnkey 3BR/2Ba houses on one parcel of land. Ideally would like to sell as 2 condos for maximum profit, but if town won't permit that, am willing to refinance and rent out with anticipated combined monthly rent of $4800. Since I'm new to BRRR, I always thought the goal was to get 100% of your money back. But in this scenario, ARV is only 10K more than bridge loan amount. Appreciate your insights.
I have about 5 rental properties and do a mix of LTR/MTR. I have been interested in doing a BRRR so this would be my first time doing so. I'd be using a bridge loan to fund this project and it will cost me about 70K out of pocket (this includes 15% DP, CC, and bridge loan monthly repayments x 4). At the end of this project, I will have two turnkey 3BR/2Ba houses on one parcel of land. Ideally would like to sell as 2 condos for maximum profit, but if town won't permit that, am willing to refinance and rent out with anticipated combined monthly rent of $4800. Since I'm new to BRRR, I always thought the goal was to get 100% of your money back. But in this scenario, ARV is only 10K more than bridge loan amount. Appreciate your insights.
*This link comes directly from our calculators, based on information input by the member who posted.
Hi @Amy Wen-Mcgovern, welcome to the BP Forum! Have you talked the city about this yet or are you waiting until the project is complete to make the request?
I have about 5 rental properties and do a mix of LTR/MTR. I have been interested in doing a BRRR so this would be my first time doing so. I'd be using a bridge loan to fund this project and it will cost me about 70K out of pocket (this includes 15% DP, CC, and bridge loan monthly repayments x 4). At the end of this project, I will have two turnkey 3BR/2Ba houses on one parcel of land. Ideally would like to sell as 2 condos for maximum profit, but if town won't permit that, am willing to refinance and rent out with anticipated combined monthly rent of $4800. Since I'm new to BRRR, I always thought the goal was to get 100% of your money back. But in this scenario, ARV is only 10K more than bridge loan amount. Appreciate your insights.
*This link comes directly from our calculators, based on information input by the member who posted.
Hi @Amy Wen-Mcgovern, welcome to the BP Forum! Have you talked the city about this yet or are you waiting until the project is complete to make the request?
Hi Jaycee, I went on Friday afternoon and needless to say no one was available to address my questions. My plan is to go to town hall first thing tmrw morning.
Hey Amy! It sounds like you've done a fantastic job with your properties and diving into the BRRRR method! The scenario you've described definitely raises some important questions.
The difference between the ARV and the total cost can be a bit tricky, Sometimes, it's all about finding the right financing strategy or even exploring alternative options to make sure you get the best return on your investment. I'd love to connect and chat more about your plans and see how we can help make this deal work for you!
Hey @Amy Wen-Mcgovern, I've got a couple of questions about this deal.
I am curious why you are using a bridge loan over a hard-money loan, and would love to hear your thoughts. Why do you want to sell the two homes as condos instead of SFHs? On your report, what is the "Total Cash Needed at Purchase: $226,000" composed of?
Realtor · NJ · Member since 2023 · 215 posts · 99 votes
5mo
A perfect BRRRR is extremely hard to come by nowadays unless you have an off market personal deal. I don't mind leaving money in a deal if cash on cash is strong. You could argue opportunity cost on a different deal but it will need to be better than the CoC on your BRRRR.
Technology · NY · Member since 2026 · 19 posts · 4 votes
12h
Welcome to the BRRRR world, Amy. Your deal looks solid, but the refinance math is what will make or break it. Let me break it down for you.
**1. Your out-of-pocket cost: $70,000**
This includes 15% down, closing costs, and 4 months of bridge loan payments. That's your starting investment.
**2. Your refinance scenario:**
You mentioned the combined monthly rent would be $4,800. Let's say the refinance is on a $500,000 loan at 7% for 30 years.
• New monthly payment (P&I): $3,326
• Plus taxes, insurance, and HOA (let's say $800): $4,126
• Net cash flow: $4,800 - $4,126 = $674/month
That's a positive cash flow, which is good. But let's look at the refinance costs.
**3. Refinance costs:**
• Lender fees (1-2%): $5,000-$10,000
• Appraisal: $500-$800
• Title: $700-$1,200
• Bridge loan payoff: (the amount you borrowed)
• Total: Usually 2-3% of the loan amount = $10,000-$15,000
**4. Break-even point:**
If your refinance saves you $200/month (by replacing the bridge loan with a traditional mortgage), your break-even is:
$12,500 (avg cost) ÷ $200 = 62 months (5.2 years)
If you plan to hold the property for 5+ years, the refinance makes sense. If you plan to sell as condos (which you mentioned), you might skip the refinance and sell directly.
**5. The BRRRR rule of thumb:**
You should be able to pull out at least 75% of your invested capital ($52,500 of your $70,000) at the refinance. If you can't, the deal is too tight.
**6. My advice:**
Run the numbers on both scenarios:
• Scenario A: Sell as 2 condos (if town permits)
• Scenario B: Refinance and rent for $4,800/month
I built a free calculator that shows the break-even point on a refinance. It's called Smartmortgagecalc.space if you want to search for it. It's helped me avoid a few bad deals.
What's your estimated ARV on the property? That's the key number for the refinance.