If you are familiar with buy to let and property investing, you may have come across the BRRR method or heard of people talking about ‘BRRR’ and wondered what on earth it means. Essentially the BRRR method is a way of recycling your cash (deposit) to allow you to invest over and over again without running out of money. The deposit is the biggest barrier to buying property. No matter how much money you start with or earn eventually everybody runs out of cash. The BRRR method allows investors to keep using the same money to keep buying more properties and prolong the capital you have to invest to accelerate your portfolio. 
 
But how does the BRRR method work? And how can you implement it to grow your property portfolio. 

Buy 

The method begins with your 1st property. You have your initial deposit and some cash left over to cover legals, stamp duty and a potential refurb project. The 1st step is to buy a property below market value(often referred to as BMV) so that you lock in equity within the property on day 1. This will likely involve buying a property in much need of a refurbishment, either due to damage or the property simply needs bringing back into the 21st century with some modernisation. This may a complete overhaul or just a lick of paint and new carpets. 

Refurbish 

Once you have bought your bargain property its time to add some value to the property through a refurb, again this can be as simple or extensive as you need. From a simple clean up to knocking walls through and extending the property. By buying the property for a discount in thw 1st place, adding value is increasing the equity you are building within the property. 

Rent 

Once the refurbishment is complete the property is ready for a tenant to move into. If you have completed the refurb to a brilliant standard, you should be able to command top end market rent for your lovely new refurbished property. This will allow you to maximise your returns and increase your cashflow each month. 

Refinance 

After 6 months of ownership every lender will allow you to remortgage the property to 75 - 80% of its new open market value. Remember, you have created a lot of equity from buying at a discount and adding value through your refurb. Its now time to release that equity through a remortgage. Upon completion of the remortgage and repayment of any finance you have in place from buying the property the surplus funds will be paid to you. Those funds are now back in your account for you to use as a deposit on another property, whilst keeping hold of the 1st property. 
 
This method can be used over and over to recycle and reuse your funds to grow your portfolio aggressively. Rather than holding a property for many years, collecting the rental income and adding to your funds with more of your own savings you can use the equity you have built by releasing this much sooner to buy more and more properties. 

The key takeaways of this method are: 

Ensure you buy a property at a discount in the 1st place 
Be conservative with your figures on the purchase, the cost of the refurb and the end value 
Gather plenty of comparable data on similar properties in that area to gauge the open market value after the refurb. 
Work backwards from the end value to determine what you can offer for the property after you factor in what it is going to cost you to refurbish it. 
 
It is very difficult to release 100% of your initial investment to invest again, but you can pull out a good portion of that to speed up the time it takes to gather enough funds to purchase property number 2,3 and 4 and so on. Like with all property investment you should have a goal in mind of how much you would aim to release with your refinance and work around that. That will help you determine your purchase price and how much you are willing to spend on a refurb etc. 
 
As you can see the BRRR method is fairly straight forward and has been implemented by many property investors over the years to catapult their portfolios and is a method you can implement too by following these simple steps. 
 
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