In This Article
What is the BRRRR Strategy?
BRRRR stands for Buy, Rehab, Rent, Refinance, Repeat. The goal is to purchase an undervalued or distressed property, add value through renovation, rent it out to qualify for a refinance, pull out most or all of your original capital through the refinance, and then repeat the process with the recovered funds.
Done correctly, BRRRR lets you build a rental portfolio without tying up large amounts of capital in any single deal. The refinance recycles your money — in theory allowing you to acquire multiple properties with the same initial capital stack.
The BRRRR promise: If your all-in cost is less than or equal to your refinance proceeds, you have effectively acquired a cash-flowing rental property for little to no capital left in the deal. This is the "infinite return" scenario — and it is possible in Ontario with the right deal and execution.
Why Ontario is Different
Most BRRRR content is American. The numbers look different in Ontario for several reasons that significantly affect whether a deal works.
- Land Transfer Tax (LTT): Ontario charges provincial LTT on every purchase. If the property is in Toronto, you also pay the Toronto Municipal Land Transfer Tax — doubling the acquisition cost. On a $500,000 purchase in Toronto, that's roughly $14,000 in LTT alone.
- CMHC mortgage insurance: If you refinance above 80% LTV, CMHC insurance applies. This premium (up to 4.5% of the mortgage) is added to the loan balance and affects your actual proceeds.
- Rent control: Properties built before November 15, 2018 are subject to Ontario's rent increase guideline. This caps your annual rent increases and affects long-term cash flow projections.
- CRA T776 reporting: Rental income is reported on the T776. Capital Cost Allowance (CCA) is available but must be managed carefully — recapture on sale can create a significant tax event.
- Higher purchase prices: Ontario markets, particularly in the GTHA, have higher entry points than most US markets. This raises the minimum deal quality needed for BRRRR to work.
Calculating Your All-In Cost
Your all-in cost is the total capital deployed to get the property renovated and rented. This is the number your refinance proceeds need to approach or exceed for BRRRR to work.
| Cost Component | Notes |
|---|---|
| Purchase price | The agreed sale price |
| Provincial Land Transfer Tax | Calculated on purchase price; see LTT article for rate table |
| Toronto Municipal LTT | Applies only to properties within the City of Toronto boundary |
| Legal fees | Typically $1,500–$2,500 for purchase; another $1,000–$1,500 for refinance |
| Home inspection | $400–$700; skip only on properties you know extremely well |
| Renovation costs | All materials and labour; include a contingency of 15–20% |
| Carrying costs during rehab | Mortgage payments, property tax, insurance, utilities while vacant |
| Appraisal fee | Required for the refinance; typically $350–$600 |
Common mistake: Investors calculate all-in cost using only the purchase price and renovation budget. LTT, legal fees, and carrying costs are real cash out of pocket and must be included. Leaving them out makes every deal look better than it is.
After Repair Value (ARV)
ARV is what the property will be worth once the renovation is complete. This is the number your lender uses to calculate how much they'll lend on the refinance — and it is the most critical assumption in your entire BRRRR model.
ARV is based on comparable sales (comps) — recently sold properties of similar size, condition, and location. Your estimate needs to be grounded in actual data, not what you hope the renovated property is worth.
Conservative underwriting: Use the lower end of your comp range for your ARV estimate. Appraisers are not obligated to match your projection, and a lower-than-expected appraisal can leave you with less refinance proceeds than planned and more capital stuck in the deal.
Sources for Ontario ARV comps:
- MPAC property assessment data (free via ontario.ca)
- Recent sales through a licensed realtor (HPI data)
- Sold listings on realtor.ca (typically 30-day delay)
- A formal appraisal from a CREA-designated appraiser before you commit to the deal
The Refinance
Once the property is renovated and rented, you approach a lender for a refinance. The lender orders an appraisal, confirms the rental income, and offers a new mortgage based on the property's current value.
How Much Can You Pull Out?
For conventional (non-insured) mortgages on investment properties in Canada, lenders will typically advance up to 80% of the appraised value (LTV). On rental properties, many lenders cap at 80% even with strong income.
| ARV | 80% LTV Refinance | 75% LTV Refinance |
|---|---|---|
| $500,000 | $400,000 | $375,000 |
| $600,000 | $480,000 | $450,000 |
| $700,000 | $560,000 | $525,000 |
| $800,000 | $640,000 | $600,000 |
Your refinance proceeds are the new mortgage amount minus any existing mortgage balance. If you purchased with a mortgage, the equity you can pull out is the new loan amount minus what you owe. If you purchased with cash, the entire refinance amount is proceeds back to you.
Capital Left In — The Key Metric
Capital left in is the difference between your all-in cost and your refinance proceeds. This is the most important number in a BRRRR deal.
Capital Left In = All-In Cost − Refinance Proceeds
| Result | What It Means |
|---|---|
| $0 or negative | Full BRRRR — you recovered all or more than your capital. Infinite return on capital left in. |
| Small positive ($10K–$30K) | Strong deal — most capital recovered, rental cash flow on a small base |
| Large positive ($50K+) | Partial BRRRR — still valid if the cash flow supports it, but capital recycling is limited |
| Equal to a conventional down payment | No better than a standard buy-and-hold — BRRRR added no capital efficiency |
Full Example: Ontario BRRRR Deal
Here is a simplified BRRRR deal modeled for an Ontario property outside Toronto.
| Item | Amount |
|---|---|
| Purchase price | $420,000 |
| Provincial Land Transfer Tax | $4,875 |
| Legal fees (purchase + refinance) | $3,500 |
| Renovation budget | $55,000 |
| Carrying costs (4 months) | $8,400 |
| Appraisal + misc. | $1,200 |
| Total All-In Cost | $492,975 |
| ARV (post-renovation appraisal) | $640,000 |
| Refinance at 80% LTV | $512,000 |
| Capital Left In | −$19,025 (full BRRRR) |
In this example, the investor recovered all of their original capital plus an additional $18,925. The property now generates rental income on a mortgage of $512,000 — with essentially zero of the investor's own money remaining in the deal.
Note: This example assumes a purchase with cash (no acquisition mortgage). Most Ontario BRRRR investors use bridge financing or a HELOC to fund the purchase and renovation, then convert to a conventional mortgage at refinance. The capital left in calculation works the same — the bridge debt is repaid from refinance proceeds.
Risks and What Can Go Wrong
BRRRR is not a guaranteed strategy. The specific risks in Ontario:
- ARV comes in below projection. If the appraiser values the property lower than expected, your refinance proceeds drop and more capital is left in. Always underwrite to conservative comps.
- Renovation overruns. Contractors, permit delays, and hidden structural issues are common in older Ontario housing stock. Budget a minimum 15–20% contingency.
- Carrying costs extend. If the renovation takes longer than planned or the property sits vacant after renovation, carrying costs erode your margin.
- Lender restrictions. Some lenders will not refinance a property within a certain period of purchase (a "seasoning period" of 6–12 months). Confirm this with your mortgage broker before structuring the deal.
- Debt service coverage. On the refinanced mortgage, your rental income needs to support the payments. Lenders use DSCR thresholds — if the cash flow doesn't cover debt service at a stress test rate, the refinance may not be approved at the amount you need.
- CCA recapture on sale. If you've claimed Capital Cost Allowance to reduce rental income, the full amount is recaptured as income when you sell. Model this into any exit scenario.
Ontario BRRRR Property Analyzer
Model the full capital stack, refinance scenario, and equity waterfall for Ontario BRRRR deals. Includes Ontario Land Transfer Tax, carrying costs, CMHC insurance, and a 5-year projection. One-time purchase, instant download.
Get the BRRRR Analyzer — CA$45.99 →Summary: BRRRR Checklist for Ontario
- Calculate all-in cost including LTT, legal fees, and carrying costs — not just purchase price and renovation
- Base your ARV on actual comparable sales, not best-case projections
- Confirm your lender's LTV ceiling for investment property refinances (usually 80%)
- Ask your mortgage broker about seasoning periods before structuring the deal
- Model debt service coverage at the stress test rate on the refinanced mortgage
- Include a 15–20% renovation contingency in your all-in cost
- Understand the CRA tax implications before claiming CCA
This article is for informational purposes only and does not constitute financial, tax, or legal advice. Real estate investment involves risk. Always consult a licensed mortgage professional, accountant, and real estate lawyer familiar with Ontario law before proceeding.