Flipping & BRRRR Strategy ROI Calculator
Flipping & BRRRR Strategy ROI Calculator
Calculate ROI, cash flow, and equity growth for house flipping and BRRRR real estate investments.
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House Flipping vs BRRRR: Two Paths to Real Estate Wealth
Flipping: Buy distressed property for $150K, invest $50K in rehab, sell for $250K = $50K profit in 6 months (minus 10% in costs = $25K net). Fast cash, but you pay capital gains tax and start over. BRRRR: Same property, same rehab, but refinance at $200K (80% LTV), pull out your $50K, and rent for $1,800/month. Keep the asset, build equity, repeat indefinitely.
Flipping is a job—you stop working, income stops. BRRRR builds a portfolio that generates passive income forever. The catch? BRRRR requires patience, landlord skills, and dealing with tenants. Flipping needs speed, accurate rehab budgets, and timing the market. Both beat stock market returns when done right.
House Flipping Breakdown
Typical Flip Numbers
- Purchase: $150,000
- Rehab: $50,000 (kitchen, baths, flooring)
- Holding Costs: $6,000 (6 months @ $1K/mo)
- Selling Costs: $18,750 (7.5% commission + closing)
- Total In: $224,750
- Sale Price: $250,000
- Net Profit: $25,250 (11.2% ROI)
Hidden Costs
- Loan interest: $5-10K (hard money at 10-12%)
- Property taxes during hold
- Insurance (vacant property rates higher)
- Utilities during rehab/staging
- Permits & inspection fees
- Unexpected repairs (always budget +20%)
- Capital gains tax: 20-37% if you flip more than one property/year
BRRRR Strategy Breakdown
BRRRR = Buy, Rehab, Rent, Refinance, Repeat. The goal: recycle your capital by pulling it back out through refinancing, then repeat with another property.
Phase 1: Buy & Rehab
- Purchase: $150,000 (distressed)
- Down Payment: $30,000 (20%)
- Rehab: $50,000
- Total Investment: $80,000
- Property Value Post-Rehab: $250,000
Phase 2: Rent & Refinance
- Rent: $2,000/month
- Refinance at 80% LTV: $200,000 loan
- Pay Off Original: -$120,000
- Cash Out: $80,000 (recover full investment!)
- Monthly Cash Flow: $300-500/mo
The BRRRR Advantage
You recover your $80K investment through refinancing, so you can do it again. Do this 5 times = 5 properties with the same $80K, generating $1,500-2,500/month total cash flow + equity growth + tax benefits. Infinite ROI because your capital is recycled.
Side-by-Side Comparison
| Factor | House Flipping | BRRRR Strategy |
|---|---|---|
| Time to Profit | 4-6 months | 12-18 months |
| Initial Capital | $50K-100K per deal | $50K-100K (reusable) |
| Profit Type | One-time lump sum | Ongoing cash flow + equity |
| Tax Treatment | Short-term capital gains (high) | Rental income (depreciation offsets) |
| Scalability | Limited by capital & time | Infinite (recycle capital) |
| Risk Level | High (market timing) | Medium (tenant risk) |
| Ongoing Work | None after sale | Property management |
| Wealth Building | Active income (job) | Passive income (business) |
Critical Success Factors
For Flipping
- ARV accuracy: Comps within 0.5 mile, sold last 90 days
- 70% Rule: Max purchase = (ARV × 0.7) - Rehab
- Speed: Every extra month holding kills profit
- Contractor reliability: Bad contractor = blown budget
- Market timing: Don't flip into downturn
- Exit strategy: Have backup plan if it won't sell
For BRRRR
- 1% Rule: Monthly rent ≥ 1% of purchase price
- Forced appreciation: Buy 30-40% below ARV
- Refinance readiness: Good credit (720+), 6-12 month seasoning
- Cash flow buffer: $200-300/mo minimum after PITI
- Property management: DIY or hire at 8-10%
- Reserve funds: 6 months expenses for vacancies/repairs
Common Mistakes to Avoid
Deal Killers
Flipping:
- Overimproving for neighborhood
- No contingency budget (always add 20%)
- Emotional attachment to property
- Buying without pre-approved financing
- Ignoring permit requirements
BRRRR:
- Refinancing too soon (need 6-12 mo seasoning)
- Overleveraging (shooting for 100% return)
- Underestimating vacancy rates (5-10% normal)
- Bad tenant screening (costs thousands)
- Ignoring property management burden
Frequently Asked Questions
Flipping: Better for quick cash, don't want to be landlord
BRRRR: Better for long-term wealth, portfolio building, passive income
Flipping: $50K-100K minimum (down payment + rehab)
BRRRR: $50K-100K initially, but reusable through refinancing
Formula: Max Purchase Price = (ARV × 0.70) - Rehab Cost
Example: $250K ARV × 0.70 = $175K - $50K rehab = $125K max purchase
Monthly rent should equal 1% of purchase price
$150K property should rent for $1,500/month minimum
Realistic timeline: 4-6 months total
2-3 months: Rehab
1-3 months: Listing to closing
Yes, if: You buy 30-40% below market and add value through rehab
Banks refinance at 75-80% of appraised value, letting you pull capital out
Flipping: 620+ for hard money, 680+ for conventional
BRRRR: 720+ ideal for best refinance rates and terms
No, but hire licensed contractors
You need permits for major work. Unlicensed work kills appraisal and resale
Options: Keep as rental with original loan, sell (becomes flip), or wait for market appreciation
Always have backup plan before starting
BRRRR: Better in any market (hold long-term)
Flipping: Risky in declining markets, great when prices rising