What is the BRRR Method??
Posted on 5th April 2022 at 13:36
What is the BRRR method??
Experienced property investors will be familiar with the Buy, Refurbish, Refinance, Rent model. This is a
financing strategy very common amongst experience property investors, used to help them rapidly grow
their portfolio. It helps investors to ‘recycle’ their deposit and buy again sooner by releasing their
investment and using it again on their next purchase. We will go through each step-in turn...
The first step is to buy a property, typically at a discount or ‘Below market value’ or BMV. In doing so you
have created equity from Day 1 that you can release later down the line. You will then create additional
value by completing some renovation works, which takes up to step 2 – refurbishment.
Upon purchasing your property, you will look to increase the value of your purchase through a renovation
project. This may be something as simple as a lick of paint and new carpets to give the property a fresh
feel, all the way up to a full renovation. This may include a new kitchen, bathroom and even replastering
for example. By buying at a discount and increasing the value of the property through your renovation
you have created equity within the property, equity which you can release to use again on a future
purchase through refinancing.
Refinancing is just a fancy word for remortgaging. You may have bought the property cash in which
remortgage will release as much equity as you put in upon purchasing, or if you remortgaged. You can
now take out a mortgage to take back your initial investment and a % of the uplift in value. Upon
completion of your mortgage, you will receive the surplus funds to be used on your next purchase either
as a cash investment or a deposit.
Once you have completed your refurb work and your property is fit for someone to move in you can now
rent it out to a tenant. As you will have completed a refurb and the property will be to a top standard you
can look to achieve top market rent, which will increase your return on investment.
- Money back sooner
- Reduced maintenance due to refurb
- Recyle same deposit over and over
Tagged as: apartment, buytolet, flat, home, house, invest, investor, mortgage, renal, rent, rentalhome, sell, sellersmarket
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