In my last video, I thought I’d explain how I use bridging finance to recycle my cash when I'm buying properties. I don't leave my money in properties, I pull my money out, effectively making my property deals ‘no money down’ deals. I've done hundreds of property deals over the years, and I've also trained thousands of people to do the same.
Let's say there's a £100,000 house and you want to buy it, and it's in good condition; most people will put down £25,000 deposit, and then they'll get a mortgage for the rest. You don't want to do that. You want to find a property that's run down, that's filthy, that's disgusting, that has the potential to be like that nice £100,000 house. However, you buy it for £50,000. You use £25,000 of your money to buy it. You get the rest from bridging finance including the money for the refurb.
So, all in you spend £75,000 but then you've pushed the value up so it's like the £100,000 house. You then get a normal mortgage for £75,000, and use that 75 grand to pay off the bridging and pay yourself back. That's how you refinance and recycle your cash!
Case study with rapper Krept
This strategy is an example of a BRRR deal. I have taught a lot of people this exact method and it has helped them build property portfolios starting with quite small pots of cash. One example was when I helped rap star Krept do this in Liverpool.
You can check out the full story here. Here are the facts and figures:
- Buying Price: £43,000
- Refurbishment Cost: £30,000
- Total Amount Invested: £75,000
- After Repair Value: £100,000-£110,000
- Monthly Rental Income: about £1,200
- Monthly Profit: £500-£600
Krept got this property right before the introduction of Article 4 in the area. Article 4 requires planning permission for properties to be rented out as HMOs. However, as Krept’s property was rented out before the implementation date, he has grandfather rights to continue renting it as an HMO. Buying right before an area becomes Article 4 is a great strategy, as it effectively prevents any future competition and adds value to your property.
Getting started with BRRR
If you want to start doing BRRR deals of your own, you will need the correct training. A good starting point is to download my free guide book, the Buy, Refurbish, Refinance: Getting Started Guide which will give you a general overview of the strategy. Next, you can attend my free BRRR webinar where we will get into more detail and talk about the options that are open to you in terms of advanced training.
But if you are really serious about taking action and beginning the process of buying your first BRRR property, you should skip all that and book a free call with one of our expert training advisors today.
Most people will simply download the e-book; some will attend the webinar; but only a tiny minority will commit to speaking to someone directly about their future. Remember that if you do what is ordinary, you will get ordinary results. If you do the extraordinary, your results will be extraordinary as well!