The BRRR Property Investment Strategy: If you want to be a property investor in 2024, you need to know what BRRR is and how it works. BRRR stands for Buy, Refurbish, Refinance, Rent. This is nothing like the traditional way to buy property. In a recent video, I explain how to structure a BRRR investment and why rich people buy properties this way. But I also tell you the downfalls, pitfalls, and some of the caveats and issues with the BRRR strategy that you need to be aware of, if you want to be a property investor.
If you want to understand the BRRR property investment strategy from beginning to end, I highly recommend watching the full video at the top of the page. In this article, I will give you a 3-step guide to the BRRR property investment strategy.
The BRRR Property Investment Strategy: Step 1. Understanding Buy-To-Let
Firstly, let's look at the normal way to buy a house. I'm sure this is the way you're familiar with. Let's say there's a £200,000 property. How would you normally go about buying a £200,000 property? You probably save up a deposit of £50,000, put that down, and get a mortgage for the outstanding difference, which would be £150,000. Then your mortgage payments might be £500 a month, but your rent would be £1,000 a month. That means you would be making a nice passive income from your £50,000 investment, as well as waiting for the property to go up in value.
Now, that is a good strategy. It's called buy-to-let. The only problem with buy-to-let is you have to save up £50,000, and then you have to save up another £50,000 to buy your second property and so on. If you want to buy 10 properties, you're going to need to save half a million, which most people physically wouldn't be able to do because the average salary is only about £30,000 a year.
The BRRR Property Investment Strategy: Step 2. Understanding BRRR
Buy, Refurbish, Refinance, Rent, how does this work? This is where you buy a property, but you buy one that's run down. So, you might buy a property for £100,000 rather than for £200,000. It needs £50,000 spent on it in the form of a refurb. It's got structural issues, damp, dry rot, so you buy it for £100,000. However, you don't buy it with a mortgage. You buy it cash because it's an uninhabitable house. You can use a bridging loan to do this from specialist lenders.
You then spend £50,000 refurbishing it and making it beautiful, but now you've increased the value, and now it's worth £200,000. That is when you refinance. You now get a mortgage of 75% of the new value, and the new value is £200,000. Therefore, you're now getting £150,000 back in your pocket tax-free, because they can't tax you on debt. This means that your £100,000 purchase price and your £50,000 refurb are now coming back to you, which means you can do what? You can go and buy another property! This is a way of recycling your money.
The BRRR Property Investment Strategy: Step 3. Understanding The Downsides To BRRR
But what are the downsides? Well, number one, the downside is finding these deals. I know there's going to be people that say, “Oh, where do you find a rundown house for £100,000? These deals don't exist.” That's not true. They do exist. You can buy them from auctions with motivated sellers, even with agents. However, it will take time and the right training to find a deal like this.
Another con is you might find a deal like this, but you might not be able to get bridging finance because there are a lot of bridging companies that say you need experience. That's one of the reasons why I set up Samuel Leeds Finance. I put £1 million of my own money into the company to loan it out to my students, to help them get their first deal.
Another risk of Buy, Refurbish, Refinance, Rent is that the refurb can go over budget, and this is quite normal. Sometimes you need to put in money, and now the deal doesn't stack up, and that can be an absolute nightmare. So, make sure when you're doing this that you get independent building surveys, get builder quotes, and do it properly. This is to be treated seriously. This is a real business. Also, make sure to have the relevant property training before you get started.
Learn More About The BRRR Property Investment Strategy, And Other Property Strategies, For Just £1!
Why not learn more about the BRRR property investment strategy, and other property strategies, from a property expert? Join me at my next £1 training event!
On the course, you will learn how to:
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Become a property investor using other people’s money so that you can get started straight away
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Utilise the 5 different types of raised finance so that you know exactly what to offer and when
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Find the perfect properties for the BRR strategy
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Recycle your money so that you can ‘rinse and repeat’
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Build a power team you can trust, so that you can save time and money
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And much more!
Tickets are only £1, and you can get yours here. If you are ready to take action, I hope to see you very soon!
