Your First BRRRR Deal

Starting the Analysis

You have found a property on the MLS, a wholesaler sent you a deal, or you drove past a house with overgrown grass and a For Sale By Owner sign in the yard. You have a purchase price, a rough idea of what it needs, and a sense of what it could be worth after renovation. Now you need to know if the numbers actually work.

From any page in Kaison, click Analyze in the sidebar under the Analysis group. This opens the deal analyzer — a single form that captures everything the underwriting engine needs to evaluate your deal.

Selecting Your Strategy: BRRRR

The first field is Deal Type. Select BRRRR — Buy, Rehab, Rent, Refinance, Repeat. This tells the engine you plan to hold the property as a rental and refinance out your capital after stabilization. The alternative is Flip, which models a sale instead of a refinance, but that is a different guide.

Quick Check vs Full Analysis

Kaison offers two modes. Quick Check is a pre-screen that takes only a few fields — purchase price, ARV, rehab estimate — and tells you whether the deal is worth spending time on. It does not calculate cashflow, scoring, or risk flags. Think of it as a gate before the gate: a 30-second filter to avoid wasting an hour on a deal that was never going to work.

Full Analysis is the 8-step pipeline. It takes every input field, runs the P90 stress model, calculates carry costs and returns, scores the deal across five dimensions, and produces a GO / MARGINAL / NO-GO verdict. This is where the real decision gets made.

In this guide, we will walk through both. We will start with the Quick Check to see if our example deal is worth a closer look, then run the Full Analysis to get the complete picture.

Entering Your Numbers

Our example deal is 123 Oak Street — a 3BR/2BA single-family ranch listed at $145,000. It needs a full cosmetic rehab: kitchen, both baths, flooring, paint, and curb appeal. After renovation, comparable sales suggest an after-repair value (ARV) of $215,000. Let us walk through every input field.

Purchase & Property

The purchase price is the amount you are paying for the property — not the list price (unless you are offering full ask). If you are negotiating, enter your offer. You can always re-run the analysis with a different number.

Acquisition Costs

Acquisition costs are the fees you pay to close on the property, separate from the purchase price itself. These are real dollars out of pocket that increase your total cost basis.

Comps & Market

The after-repair value (ARV) is what the property will be worth after your renovation is complete. Kaison asks for three numbers: a low, mid, and high ARV. These come from your comparable sales analysis — properties that have sold recently in the same area, in similar condition to what yours will be post-rehab.

ARV confidence tells Kaison how much to trust your comps. With 5 recent comps in a tight range ($213K–$228K, a 7% spread), we can confidently say this is a High confidence ARV. If you only had 2 comps or the spread was over 20%, you would select Medium or Low, and the engine would apply wider buffers to account for the uncertainty.

Days on market (DOM) tells Kaison how quickly properties move in this submarket. At 35 days, this is a reasonably active market. If DOM were above 90, it would flag a soft market — meaning your property could sit for months before finding a tenant, adding carry costs.

Rehab Scope

This is where you itemize the work. Kaison asks for each line item's category, description, estimated labor, and estimated materials. Be specific — "Full kitchen remodel" is better than "Kitchen." Here is our scope for 123 Oak Street:

Scope confidence tells the engine how much contingency to add. With High confidence (contractor quotes in hand), Kaison adds a 12% contingency buffer. If you only had a walkthrough estimate (Medium), the buffer would be 18%. A pre-inspection guess (Low) gets 25%.

Financing

Kaison needs to know how you are funding the deal during the rehab phase and how you plan to refinance after stabilization. Most BRRRR investors use a line of credit (LOC) to fund the purchase and rehab, then refinance into a long-term DSCR loan once the property is rented.

The LOC interest rate matters because it drives your carry costs during the rehab. Every day the property sits with an open LOC draw, you are paying interest. The refi rate determines your long-term debt service payment, which directly affects monthly cashflow.

Rental Projections

Holding Costs

Holding costs are the fixed monthly expenses you pay while the property is not generating rent — during the rehab and lease-up period. These compound with LOC interest to form your total daily carry cost.

Quick Check Results

Before diving into the full analysis, let us run a Quick Check. This pre-screen takes the purchase price ($145,000), the rehab estimate ($38,000), and the ARV ($215,000) and calculates a rough basis-to-ARV ratio.

Our deal lands at 85.1% — right at the edge. The Quick Check result is WORTH A CLOSER LOOK.

A Quick Check is not a decision tool. It is a time-saving tool. If the basis-to-ARV ratio came back at 95%, you would know immediately that no amount of financial engineering would make the deal work and you could move on. At 85%, there is enough potential margin to justify spending the time on a full analysis. Let us do that now.

Full Analysis: The 8-Step Pipeline

When you click Run Full Analysis, Kaison feeds your inputs through an 8-step pipeline. Each step builds on the one before it. The output is deterministic — same inputs always produce the same output — and every number is traceable back to the formula that produced it.

Step 1: Scope the Rehab

The engine takes your $38,000 scope estimate and applies a contingency buffer based on your stated confidence level. With High confidence (contractor quotes in hand), the buffer is 12%.

The $42,560 is not a prediction that your rehab will cost that much. It is the P90 estimate — the budget threshold where 9 out of 10 similar rehabs come in under. Your contractor said $38K. The engine says plan for $42.5K, because change orders happen.

The largest line item is the kitchen at $12,500. Kaison flags this because kitchens are where scope creep lives — the backsplash you did not plan for, the under-cabinet lighting, the range hood upgrade.

Step 2: Estimate the Timeline

You estimated a 120-day (4-month) rehab. With High scope confidence, Kaison applies a +15% timeline buffer. Your 30-day marketing estimate gets buffered by the market absorption factor.

Those extra 27 days at P90 are not free. Every additional day costs you LOC interest plus holding costs. The next step quantifies exactly how much.

Step 3: Calculate Carry Costs

Carry costs are the daily price of owning a property that is not yet generating income. They have two components: LOC interest on the capital deployed, and fixed holding costs (insurance, taxes, utilities).

$51.87 per day. That is the clock ticking from the moment you close. Now apply it to both timeline scenarios:

The carry cost delta is $1,401. That is the real dollar cost of 27 days of normal execution friction — a contractor who runs two weeks late, a week of vacancy before the tenant moves in, a delayed closing. Not catastrophic, but not zero.

Step 4: Total Cost Basis

Cost basis is the all-in number — every dollar you put into this deal before it starts generating income. This is the number your refinance proceeds need to cover if you want to get all your capital back.

At target, you have $200,341 into a property worth $215,000. That is $14,659 in equity. At P90, it is $201,742 — still positive equity ($13,258), but thinner. The question now is whether the refinance math lets you get most of that capital back out.

Step 5: Model the Returns

This is where BRRRR math gets real. Kaison models your refinance, calculates the stabilized rental income waterfall, and tells you exactly how much cash you need to leave in the deal.

Refinance

The refinance gets you $161,250 back, but your cost basis is $200,341. That means $39,091 stays in the deal. This is your out-of-pocket cash — the capital you cannot recycle into the next BRRRR. It is the denominator in your cash-on-cash return.

Stabilized Rental Income

$132 per month in cashflow. That is $1,583 per year. On $39,091 of cash left in the deal, your cash-on-cash return is 4.0%. The cap rate is 6.3%. The break-even rent — the minimum rent where cashflow hits zero — is $1,579/mo, which is only $171 below your target rent. That is not much cushion.

Step 6: Score Across 5 Dimensions

Kaison does not boil your deal down to a single pass/fail. It scores across five weighted dimensions, each measuring a different aspect of deal quality. The composite score is transparent — you can see exactly which dimension is dragging the deal down and which is carrying it.

The story the scores tell is clear. The ARV confidence (20/20) and market absorption (13.8/15) are strong — we have solid comps and a healthy rental market. But the cash return (8.2/25) and equity (6.3/25) are weak. The deal works, but the returns are thin. The money is the problem, not the market.

Step 7: Risk Flags

Risk flags are specific, named conditions that the engine checks against your inputs and outputs. Flags come in two severities: warnings (concerns that merit attention) and critical flags (deal-breakers that force a NO-GO regardless of score). Our deal triggers 2 warnings:

No critical flags fired. That means the deal is not structurally broken — the LOC covers the draw, the comps are adequate, the equity does not go negative under P90 stress. But the two warnings tell you the returns are thin enough that the deal requires careful consideration.

Step 8: The Verdict

Kaison's gate logic combines the composite score and the risk flags to produce one of three verdicts:

Our deal scored 57.9/100 with 2 warnings. That puts it squarely in MARGINAL territory. The verdict:

MARGINAL does not mean "do not do this deal." It does not mean "do this deal." It means the deal is in the gray zone where the decision depends on factors the engine cannot quantify — your experience level, your risk tolerance, your ability to negotiate better terms, and whether you have a better use for that $39K of trapped capital.

What to Do with a MARGINAL Verdict

A MARGINAL verdict is an invitation to ask better questions. The analysis told you what the numbers are. Now you need to figure out which numbers can change. Here are the five levers to pull:

1. Can You Negotiate the Purchase Price Down?

This is always the first lever. Every dollar off the purchase price flows straight to your cost basis, which improves equity, reduces LOC draw (lowering carry costs), and increases your CoC return. In our deal, a $10,000 reduction to $135,000 would drop the cost basis by roughly $10,200 (the $10K plus reduced LOC interest on that amount). That alone could push the score above 65.

2. Is the Rehab Estimate Based on Bids or Guesses?

Our example uses High scope confidence because we have contractor quotes. If you are running the analysis on a deal where the rehab is a rough estimate (Medium or Low confidence), the contingency buffer alone could add $6,800–$9,500 to the cost basis. Getting real bids before committing could tighten the numbers significantly — not because the rehab got cheaper, but because the engine trusts your numbers more and applies less padding.

3. Is Rent at Median or Top of Range?

Our target rent of $1,750 sits near the middle of the $1,550–$1,850 comp range. That is defensible. If your target rent were at or above the top of the range, Kaison would flag it with RENT_AT_CEILING. Underwriting to a rent above your comp ceiling is a recipe for extended vacancy.

Conversely, if comps support a higher rent but you were conservative, there may be upside. A $100/mo rent increase would add $1,200/year to cashflow and push CoC from 4.0% to 7.1%.

4. How Much Cash Can You Leave in the Deal?

The $39,091 trapped in this deal is the root of the weak CoC return. If you have other capital sources and your portfolio strategy tolerates higher cash-in per property, this might be acceptable. But if you are trying to scale through BRRRR — recycling capital from each deal into the next — $39K locked up per property limits how fast you can grow.

5. Can You Improve the Refi Terms?

Our model uses 75% LTV at 5.5%. If your lender offers 80% LTV on a DSCR product, the refi loan jumps from $161,250 to $172,000, pulling an extra $10,750 out of the deal. That reduces your trapped capital from $39K to $28K, which nearly doubles the CoC return. Small changes in refi terms create large changes in BRRRR economics.

Saving the Deal

After running the analysis, click Save Deal at the bottom of the results page. Kaison creates a deal record with the status Potential and stores all inputs and outputs.

The deal now appears in your deals list under the Pipeline section in the sidebar. You can see the address, ARV, score, and verdict at a glance. Each deal card shows the date you analyzed it and whether the analysis used default buffers or your historical calibration.

Re-running with Updated Numbers

Deals are not static. You got a counter-offer at $140K. Your contractor revised the kitchen bid down by $1,500. You found a lender offering 80% LTV. Open the deal, update the inputs, and re-run the analysis. Kaison keeps a history of each analysis run so you can see how the verdict evolved as your information improved.

Deal Status Flow

When you first save a deal, it starts as Potential. As you move through the acquisition process, the status progresses through the pipeline:

Kaison tracks expenses, holding costs, and milestones at each stage. When you eventually reach Refinanced, you have the full data set needed for a retrospective — which is the most valuable step of all.

After the Deal Closes: The Retrospective

The analysis you just ran used default buffers — industry-standard contingency and timeline multipliers calibrated from aggregate data. They are good starting points, but they are not your numbers. The retrospective is how Kaison learns your numbers.

When you complete a deal — tenant is in, refi is done, all expenses are logged — Kaison can compare what you estimated against what actually happened. How long did the rehab really take? What did it actually cost? Did the appraisal come in at your ARV mid, or higher, or lower? Did marketing take 30 days or 45?

What Kaison Measures

How It Calibrates Your Buffers

After 5 completed deals with retrospectives filed, Kaison has enough data to replace the default buffers with personalized ones. If you consistently run 20% over on timeline but only 5% over on cost, the engine adjusts: your timeline buffer tightens to match your history, and your cost contingency loosens.

This is the feedback loop that makes the platform more valuable over time. Every deal you close teaches the engine something about how you execute. Are you consistently optimistic on timelines? The buffer absorbs that. Are your kitchen rehabs always 15% over but your flooring is always on budget? The engine learns that by category, not just in aggregate.

For a detailed walkthrough of the retrospective process, see Your First Retrospective →