BRRRR Deal Breakdown & Cash-on-Cash Confusion – Need Help!

[Pankil P. Patel]

Deal Breakdown & Cash-on-Cash Confusion – Need Help!

I am evaluating a real estate deal using BRRRR calculator and need help understanding why my cash-on-cash return (CoC) appears as infinity (∞%), even though I have actual cash invested. Here’s the breakdown:

Financing & Investment Details:

• Total Project Cost: $750,000
• Purchase Price: $450,000
• Rehab Cost: $300,000
• Total Investment Needed: $750,000
• Private Money Loan: $550,000 (1-year term at 9% interest)
• My Cash Investment: $200,000
• Interest for Private Money Loan: $49,500
• Closing Costs for Private Money Loan: $0
• Closing Costs for Refinance: $27,000

Total Cash in the deal: $750,000 + $49,500 + $27000 = $826,500

Exit & Refinancing:

• ARV: $900,000
• After renovation, I refinance at a new loan of ~$675,000.
• This allows me to pay off the private loan (~$550K principal + $49,500 interest).
• After refinancing, I walk away with $75,000 in cash but still have $152,000 of my own capital left in the deal ($200K + $27K - $75K).

The Issue:

When I calculate cash-on-cash return, it shows ∞%, but I know I still have capital tied up ($152K).

What am I doing wrong in my calculations? Why is my CoC returning infinity when I still have money left in the deal? Any insights would be greatly appreciated!