I’ve been investing in property for over 10 years, and I've also trained tens of thousands of people to invest successfully in property. One of the most effective strategies out there is called Buy Refurbish Refinance Rent (BRRR). Rather than you buying a house and putting a 25% deposit down and leaving that money in the deal, you buy the house; but you buy it cheap and then you refurbish it. This way you can push up the house’s value; refinance against the new value; and pull your money out of the deal.
Recycling Your Money
The mortgage company doesn’t care how much you have spent on the property or how much you spend on the refurbishment. They only care about the end value. You can normally borrow 75% of the end value. If 75% of the end value is the same as the purchase price plus your refurbishment, you effectively have your money back!
When you use this strategy, it means that you can reuse the same small pot of money over and over again! Rather than save up for a deposit for each property you want to buy, you can use the same money to buy multiple properties. This allows you to become wealthy without having a huge amount of capital to begin with.
BRRR Case Study
Nozi and her husband bought a property for £24,500 in Bishop Auckland. They spent just £2000 on the refurbishment with Nozi’s husband doing most of the work himself. The property was revalued at £50,000 post-refurbishment and the couple got a £37,500 loan from Teesside Money. This means they got back more than they initially put in. They have a £74.37 a month mortgage payment to make but have a happy tenant in the property paying £375 per month.
This means Nozi and her husband are essentially being paid to own the property! This allows them to continue building their portfolio with the same capital they started with (plus a bit more to boot)!
You can read the full case study here.
Buy Refurbish Refinance Rent: Exact Steps!
Now that’s the theory. But you want to know exactly what is involved, so let’s take a look at the exact steps you need to follow to do this yourself. This is from my free e-book the Buy, Refurbish, Refinance: Getting Started Guide:
“Stage One: Buy – Buy a property, usually in poor condition or even un-mortgageable, that you can refurbish to add value to. The properties are typically initially purchased using cash, joint ventures, bridging finance or lease option or deferred purchase agreements.
Stage Two: Refurbish – Refurbish the property to a high standard, usually setting the benchmark for the area. The key is to add the most value to the property in the most cost-efficient way.
Stage Three: Refinance – Once value has been added to the property, refinance the property to it’s new higher ‘End Value’. The aim is to try and achieve the highest end value as
possible, create a valuation pack and build great rapport with the valuer.
Stage Four: Rent – Rent out your newly refurbished property and enjoy the cash flow. If you market your property well and have refurbished the property to a high standard you will generally be able to achieve a higher rental value than the street average.”
If you are really serious about taking on this strategy and beginning your journey to financial freedom, you can download a copy of the free e-book here!
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