BRRR is one of the smartest investment strategies for both seasoned and first-time investors looking for a quick turn around. Despite all the letters, it’s actually pretty simple. The BRRR method has been around a long time and is becoming more common for property investors wanting to enter the market with minimum capital. So how does it work? Here we break BRRR step by step and how it can benefit your portfolio.
What is The BRRR Property Strategy?
The BRRR method is a four step process to property investment. It starts with sourcing a below market value property that undergoes refurbishment, is refinanced and then rented out for long term gains. Let’s take a closer look at each of the steps.
Step 1 – Buy
This is arguably the most important step of the investment model. Sourcing a property that has potential for added value requires a strategic approach and expert advice. The key is to find a project that is under market value and in an area set to boom or with stable market conditions to justify the investment. As one of the best property investment consultants, William Vale has access to hidden opportunities in the UK and Internationally which can be acquired rapidly with our exceptional team of finance and legal experts who work hard and fast to close deals before they are exposed to the wider market.
Step 2 – Refurbish
Once you have secured a property, the next step is to roll up your sleeves and refurbish. Ofcourse, most investors do not undergo the work themselves, hiring local teams can prove cost-effective and help give back to the community. It’s vital to be strategic about refurbishments, you want to add value while making sure the numbers stack up and aiming for a quick turn around. Forget posh interiors and structural changes where possible, at William Vale we can advise or take care of this stage of the investment. We recommend working with a strict budget and sticking to it to maximise the return.
Step 3 – Refinance
Depending how you have financed the initial purchase, your refinancing is your opportunity to release equity for your next investment, Alternatively you can leave invested capital in the property allowing it to escalate further. Refinancing options are subjective to cash flow requirements. If you plan to rent the property out you can switch to a buy-to-let mortgage and make a monthly profit. Your refinancing options are based on the increased value you have added to the property via the refurb (all the hard work was worth it) An experienced lender can guide you through your options and get the best product based on market rates and your long-term goals.
Step 4 – Rent
The final ‘R’ of the BRRR method is for rent. Once you have refinanced on to a buy-to-let mortgage you can let the apartment on either a short-term or long-term tenancy agreement and enjoy monthly returns. Your rental figure will be based on the added value from the refurbishment which can attract a yield and often a long-term tenant. This reduces void periods to maximise your profit. It is best to rent the property as quickly as possible even if you plan to sell it to bring in cash and grow your business.
The Benefits of BRRR
The key benefits of this investment model are;
High-Returns – By buying low and adding value you are left with the potential for a high-return if you sell, refinance or rent the property out at its new market value.
Low-entry level – Buying property in need of renovation allows you to enter the market with a lower level of capital and you can use payment strategies to benefit your cash flow which we will discuss in another article.
Cash-flow – Renting the property out allows you to bring in a monthly profit which can ease and benefit your cash flow.
Expand your portfolio- Recycling your capital into your next purchase allows you to expand your portfolio building a lucrative property business one house at a time.
The Key Highlights of The BRRR Investment Strategy
The BRRR model is growing in popularity and is a great way for investors to enter the market with a low level of capital and make a high return whilst gaining a long term asset. Sourcing the right property is key as well as having a team of experts to support you with strategic refurbishment and refinancing.
If you think the BRRR strategy could be a smart move for you, book a strategy call with one of our consultants here. We can discuss your current budget, goals and what opportunities we have available that could work and get you on the ladder to success.