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Buy Refurbishment Refinance Rent (BRRR)

What is buy refurbish refinance?

The property investment strategy to Buy Refurbish Refinance Rent (BRRR strategy) is probably the number 1 property strategy undertaken by property investors and taught by the property training community. If you were to search for it on the web you would find dozens of videos and posts with real cases and examples, aiming to explain this strategy.

Some people refer to it just as the Buy Refurbish Rent (BRR) strategy and I have also seen the “BRRRR” strategy Buy Refurbish Refinance Rent Repeat. Basically, all three terms and abbreviations relate to the same strategy.

The basic principle and aim of the buy refurbish refinance rent strategy is to recycle your initial deposit so that you can keep adding properties to your portfolio, and your deposit is not tied up in your first deal.

The key points are

  • BUY – A run down  / unmodernised property is purchased, preferably at below market value (BMV) using bridging finance.
  • REFURBISH – Value is added to the property by modernising the property, obtaining and implementing planning or permitted development rights. The works can be a light property finance refurbishment which is a quick 2-3 project or a larger project that involves extensions and conversions. The key requirement is to add value
  • REFINANCE – The short-term bridging loan is refinanced onto a long-term buy to let mortgage at a lower interest rate for typically 25 years. The buy to let mortgage is at the increased value after works and at a typical 75% loan to value mortgage there are enough funds to repay the bridging loan, the interest, the acquisition costs, and the works to the property and produce a deposit for the next project.
  • RENT – The property is rented out to produce cash flow to the buy to let mortgage and a profit for the investor
  • REPEAT – The deposit raised by the refinancing is used to do it all over again in order to grow the property portfolio and generate a larger monthly cash flow.


Can I use a BTL mortgage for BRRR?

It depends on the level of works involved. If they are very minor some lenders make take a view but these properties are not the properties you can add value and therefore tend not to work for a BRRR strategy.

Most lenders require the property to be in a lettable condition which is a higher standard than a liveable condition and the vast majority of BRRR properties are in a poor condition.


How are the returns compared with a conventional buy-to-let investment?

The BRRR strategy allows investors with limited cash funds to recyle their cash deposits by adding value to a property and not relying just on the valuation of the property goes up in value before they can refinance to raise funds for their next purchase.

Waiting for properties to increase in value can take 3-5 years but using the BRRR strategy the value can increase in 6 months and funds can then be extracted for the next deal.


Frequently Asked Questions

For the initial purchase, you will need typically a 25% deposit for the bridging loan which can come from our own cash sources or a private investor. The lender will require this deposit to minimize their risk. Alternatively, we have arranged deals with 100% finance where the client was able to offer additional security over another property and there was enough equity in the property to give the lender comfort to go to 100% of the purchase price. This area can get complicated so it is best to discuss on a case by case basis

If you believe the property investor trainers, you can pull out or recycle all of your money and repeat, repeat, repeat forever. They are selling you a course that can cost thousands of pounds and they want to make it sound as easy as it can be!

We do see actual cases we have refinanced where the client has managed to recycle all of their deposit for the next deal, but it is not easy and like any career involves hard work and dedication.

Buy it right – It is extremely hard to add value to a property if the initial purchase price was high. There is a great quote from Sir Alan Sugar “The profit is in the purchasing”. In a hot property market is difficult to buy below market value but for unmodernised ,run-down properties, the market for a cash 4-week purchase (using bridging finance) the opportunity to obtain a bargain is more likely.

Add value – This is the key. The works undertaken must be of high quality and to such a level that the finished property’s value has increased to allow the funds you have invested to be recycled.

Deliver on time and to budget – If the project takes more time, the bridging loan costs increase and any cost overruns dilute the increased value you are seeking to achieve. We have financed properties where we didn’t recognise the finished property from the property financed at the start. The WOW factor had been achieved and more space had been added, project delivered on time and to budget and the result was a large increase in value for the client.

We do see actual cases we have refinanced where the client has managed to recycle all of their deposit for the next deal, but it is not easy and like any career involves hard work and dedication.

From a loan application process perspective we are able to obtain a credit decision for a BRRR loan within a few hours. This will assist you to secure the property. The whole purchase can be completed within  4 weeks.

An investment carries some element of risk but if correctly carried out then this strategy has proven to be very profitable for property investors. The key success factors are

  1. Buy a bargain – These properties usually don’t attract many buyers because of their conditions, so make an offer below the market value and say you can complete in 4 weeks.
  2. Add value in the refurbishment process and get a good contractor to carry out the works
  3. Use a broker / adviser than knows the process inside out to make sure you can refinance as soon as the property is finished

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