Buy, refurbish, rent, refinance. The strategy works when the refinance pulls most of your cash back out, and it fails when it does not. This models the whole cycle including the bit most calculators leave out: the rental cover test that caps the refinance regardless of what the property is worth.
For investment property only. Not for a property you, or a family member, will live in.
BRRR calculator
Nothing is sent anywhere and nothing is stored. Every figure is one you enter, and the workings are set out below.
1. Buy
2. Refurbish, on a bridge
3. Rent and refinance
4. Running the property
Rental cover is the real cap, not loan to value
Almost every BRRR calculator sizes the refinance on loan to value alone. Buy to let lenders do not. They apply an interest cover ratio, testing the rent against the interest at a stress rate that is higher than the rate you will pay. If the rent does not cover at that stress rate, the loan comes down no matter what the property is worth.
This is why deals in low yield areas fail even after a strong uplift. A property worth £240,000 at 75% loan to value points to a £180,000 loan, but if the rent only covers £173,000 at the lender’s stress rate then £173,000 is your ceiling, and the £7,000 difference comes straight off the cash you get back. Drop the rent in the calculator by a couple of hundred pounds and watch the money left in jump. That single input moves the outcome more than the purchase price does.
The six month rule
Many buy to let lenders will not refinance at the new value within six months of purchase, and some want twelve. Before that point they lend against the price you paid, not what it is now worth, which defeats the whole strategy. A handful will consider day one remortgages at the new value where the works are properly evidenced, but you should plan on waiting rather than assume it.
That waiting period is not free. It is more months of bridging interest rolling up, which is why the term in this calculator matters so much. Set it to the realistic figure including letting time and the refinance itself, not the optimistic one.
Money left in is the honest measure
The pitch for BRRR is that you get all your cash back and recycle it. That happens, but far less often than the strategy’s popularity suggests, and it usually needs a genuinely below market purchase rather than a normal one. What matters is how much stays in the deal, and what that trapped cash earns you.
A property leaving £40,000 in and producing £100 a month is a 3% return on that £40,000, before any capital growth and before tax. That is not a failure, but it is not the recycling machine either, and it is worth seeing plainly before you buy the next one. The return figure here deliberately measures cashflow against money left in rather than against total cash invested, because the trapped capital is what you cannot use elsewhere.
Funding the refurb is not always cheaper
Putting the works on the bridge frees your own cash during the project, but it increases the balance that interest rolls up on, and that interest gets repaid out of the refinance. On some deals self funding the refurb leaves less money in at the end than borrowing for it. Run it both ways with the refurb funding slider at 100% and then at 0%, and compare the money left in rather than assuming leverage wins.
What this does not include
- Refurbishment overruns. Add a contingency to the refurb figure rather than treating the quote as final.
- Income tax or corporation tax on the rent, and no relief calculations of any kind.
- Capital gains tax on eventual sale.
- Whether a lender will accept the property, the works, or your experience.
- Early repayment charges on the refinance, or a minimum interest period on the bridge.
- Any stamp duty calculation. You enter that figure yourself from HMRC, because the rates and surcharges move.
Test it before you buy it
Three changes will tell you whether a deal is real or marginal. Reduce the value after refurbishment by 10%, because surveyors routinely come in under. Add three months to the term. Add 15% to the refurb cost. If the deal still works after all three, it is a deal. If it only works on the original numbers, you are relying on nothing going wrong.
The two facilities behind it
BRRR needs two separate pieces of finance and they are underwritten quite differently. Our bridging loan cost calculator goes deeper on the first, including retained against rolled up interest and what actually gets released on day one. Our commercial mortgage affordability calculator covers the refinance where the property is commercial, semi-commercial or a larger portfolio facility rather than a single buy to let.
Get both facilities lined up before you offer
The most common way a BRRR deal goes wrong is arranging the bridge and worrying about the refinance later, then discovering the rent will not cover it. We look at both at the same time, so you know the exit before you commit to the entry. Send us the numbers and we will tell you what the refinance would actually be.
Or try our other calculators.
This calculator is provided for illustration only and does not constitute financial, tax or investment advice, or an offer of finance. It is for investment property only and is not suitable for a property that you or a family member will occupy. Lender cover ratios, stress rates and refinance policies vary and are not published, so the figures are a model rather than a lending decision. Property values can fall and rental income is not guaranteed. Bolton Business Finance Ltd is not authorised or regulated by the Financial Conduct Authority and arranges non-regulated, business purpose commercial finance only. We do not arrange regulated mortgages or regulated bridging.