The carry math on a BRRRR deal is where most people discover the rehab budget was wrong

The assumption doing the most work in this model is the ARV, and you have already named it, but the sensitivity is worth making explicit. A 15k appraisal miss on a 310k target is less than five percent variance. Appraisers in thin markets, or on a duplex where single-family comps dominate, can miss by more than that without doing anything wrong. The 75 percent draw multiplies that miss, so a 20k appraisal shortfall becomes a 15k capital gap on the refi, which lands exactly when your contractor is billing the final draw and your bridge lender wants out.

The risk I do not see named here is crew sequencing as a capital event. Most investors model rehab cost and rehab duration separately. The compounding happens when a schedule slip forces a draw extension on the bridge loan at the same time a structural discovery adds cost, because now you are funding overruns with expensive short-term capital rather than equity. On a 180k bridge at 7.5 percent, a six-week extension plus a 12k structural surprise is not additive, it is a 12k cost hit plus roughly 1,600 dollars in additional interest plus the psychological pressure to approve the crew's change orders faster than you should. Rushed change order approvals are where scope creep accelerates.

The pre-1980 contingency line you are running (three to five percent of purchase price) is structurally sound, though I would confirm with your lender whether that reserve treatment affects how they underwrite your bridge-to-refi timeline, since some lenders want to see that capital committed upfront rather than held in reserve. That is a documentation and structuring question, confirm it in writing with your lender.

On the comps question: 60-day window is the right frame, but on a duplex specifically, are you finding enough income-property comps to support the ARV, or are the appraisers leaning on single-family sales and applying an adjustment that may not hold?

The carry math here is laid out clearly, and the structural allowance line is something a lot of beginners skip entirely, so it is worth slowing down on that piece.

For anyone reading this who is new to BRRRR, here is the vocabulary. BRRRR stands for Buy, Rehab, Rent, Refinance, Repeat. The idea is that you buy a distressed property, fix it up, rent it, then refinance (replace your short-term loan with a longer-term one based on the repaired value), and use the cash you pull out to buy the next property. ARV means after-repair value, what the property is worth once the work is done. A bridge loan is a short-term loan used during the rehab phase, and it carries a higher interest rate than a standard mortgage. Carry costs are the ongoing expenses (interest, insurance, taxes) you pay while the property sits unproductive.

The thread is right that rehab duration is where the math quietly breaks. To put a simple number on it: if your bridge rate is 7.5% on $180k, you are paying roughly $1,100 a month in interest alone. A six-week overrun on a 12-week job adds about $1,650 in interest before you touch any cost overrun on materials or labor.

The structural allowance point is the one I'd flag for beginners specifically. On pre-1980 housing, surprises like knob-and-tube wiring, galvanized plumbing, or soft subfloors are common enough that they belong in the budget as a real line item, not a hope. A 3-5% allowance on purchase price on a $180k property is $5,400 to $9,000. That is a meaningful number relative to the $12k cushion in the example above.

I'd also confirm ARV with a licensed appraiser or your lender's expected comp window before finalizing any deal, since appraisal variance is real and lenders have their own rules about which sales they accept as comparable.

What does your current rehab budget process look like, and are you getting contractor bids before you close or estimating from walkthroughs?

The one thing I never see work is treating the appraisal variance as a refinance problem when it is actually a comp selection problem that happens weeks earlier. By the time the appraiser is at the property, your crew is done and your bridge loan is ticking, so the 15k gap lands all at once with no runway to respond.

On the 1978-and-older stock I've been running contracts through in Memphis, I've started pulling comps myself before I even assign the contract, specifically filtering for sales within 45 days and within 0.3 miles, and if I can't find four I either widen to 60 days or I discount my ARV by 8 percent flat and see if the deal still works at that number.

What's your bridge lender's draw schedule, because the ones I've seen hit you with the full origination at close rather than spreading it, which adds another 3-4k to week-one carry before the crew touches a nail?