What is capital recycling in a BRRRR deal?

Capital recycling refers to how much of the money you originally put into a deal you're able to pull back out through the refinance - so you can use it for your next investment.

Here's the basic math: you put in a down payment, paid for rehab, and covered closing costs. That's your total cash invested. When you refinance, the lender gives you a loan based on the property's new appraised value. If that loan is large enough to pay off your original acquisition loan and return some of your invested cash, you've recycled capital.

DealPrism shows three related outputs:

Capital recycled - how much cash the refinance returns to you.

Capital left in deal - how much of your original investment remains in the property after the refi. This is the number to watch. The lower it is, the more capital-efficient the deal.

Equity captured - the difference between the appraised value and the new loan balance. This is the equity you hold in the property that you haven't pulled out.

A successful BRRRR is when capital left in deal reaches zero - meaning you've recovered everything you put in and the property is now generating cash flow with none of your original capital tied up. This is the goal of the strategy, but it's not guaranteed. It depends on your ARV estimate being accurate, the lender's LTV limit, and rehab costs staying on budget.

If capital left in deal is negative, it means the refinance returned more than your total invested capital. DealPrism displays this as a successful recycling outcome - it's not a calculation error.