ROI on BRRRR: Because Real Estate Isn’t a Vibe Without Returns

ROI on BRRRR: Because Real Estate Isn’t a Vibe Without Returns

Let’s get one thing straight — buying a property, slapping on some paint, and collecting rent doesn’t make you a real estate mogul.

What does? Knowing your numbers. Specifically, your ROI.

And if you're playing the BRRRR game (Buy, Rehab, Rent, Refinance, Repeat), calculating ROI isn't optional — it's survival.

📦 What the Hell Is BRRRR?

It’s not just a sound you make when the AC’s too high. It’s a real estate strategy that’s basically the blueprint for wealth-building on a loop:

• Buy – Find a beat-up property that smells like potential (and maybe mold).

• Rehab – Fix it up so it doesn’t scare off tenants or lenders.

• Rent – Get that monthly cash flow rolling in.

• Refinance – Pull out your equity based on the new value.

• Repeat – Rinse, repeat, get richer.

Simple to understand. Easy to screw up — especially if you ignore ROI.

💸 What’s a “Good” Return, Anyway?

Depends on your market, risk appetite, and whether you actually like sleeping at night. But here’s a cheat sheet:

• Cash-on-cash return: Aim for 8–12%

• Cap rate: 4–10%, depending on risk

• Total ROI: 15%+ annually is the sweet spot

• 1% rule: Rent should be at least 1% of the purchase price

• 50% rule: Expect half your rent to go into operating expenses

🧮 ROI: The Math That Matters

Let’s get down to the numbers. Here's the step-by-step breakdown for calculating ROI on a BRRRR deal:

1. Add Up Total Investment

• Purchase Price

• Stamp Duty & Legal Fees

• Rehab Costs

• Other fees (surveyor, broker, mortgage origination, etc.)

🧠 Total Investment = All-in money spent before rental income starts

2. Calculate Net Monthly Rental Income

Let’s say your rent is £1,200/month, but your property manager takes 10% = £120.

You're left with:
£1,080/month

Now subtract other regular costs:

• Maintenance: £50

• Insurance: £30

• Misc: £40
  Total Costs = £120

Net Income = £1,080 - £120 = £960/month

3. Annualize It

Net Annual Income = £960 × 12 = £11,520

4. ROI Time

Rental ROI (%) = (Net Annual Income ÷ Total Investment) × 100

Let’s say you put in £178,000 total.
Rental ROI = (£11,520 ÷ £178,000) × 100 = 6.47%

5. Factor in Appreciation (If You Wanna Get Fancy)

Post-rehab, property’s now worth £200,000.
You bought it at £150,000.

That’s £50,000 in appreciation.

So...
Overall ROI = ((£11,520 + £50,000) ÷ £178,000) × 100 = 34.63%

Now we’re talking.

⚠️ What Can Kill Your ROI?

• Market conditions — A downtrend eats your appreciation alive

• Shoddy rehab — Over-budget and underwhelming = nightmare combo

• Weak rental demand — No tenants, no cash flow

• Crap loan terms — High interest = low returns

• Poor management — Bad tenants, missed rent, surprise repairs — say goodbye to profit

🧠 How to Maximize ROI (Without Losing Sleep)

• Hunt down undervalued properties in rising neighborhoods

• Budget like a psycho during rehab

• Price your rent strategically, not emotionally

• Refinance only when value peaks

• Build a reliable crew (contractors, agents, lenders — the Avengers of real estate)

🔚 Bottom Line

BRRRR is more than a catchy acronym. It’s a weapon — but only if you know how to calculate and optimize your ROI.

So the next time someone tells you they’re BRRRRing their way to wealth, ask them one question:

“Cool. What’s your ROI?”

If they can’t answer, they’re not investing. They’re just renovating and praying.

Want the cheat codes to find undervalued properties before anyone else? Our guide on sourcing killer BRRRR deals drops next week. Stay tuned.