BUY, REFURBISH,RENT, REFINANCE AND REPEAT/BRRRR  
STRATEGY & CALCULATOR

STEP BY STEP GUIDE TO BRRRR PROPERTY STRATEGY

 

STEP 1

This is setting a budget and investment criteria like

- Property Purchase Price

- How would the purchase be financed- Personal/Investor Cash, Mortgage, 

  Bridging, etc.

- Ideal tenant or buyer

- Location

- Proximity to amenities

- Refurbishment budget

- Type of refurbishment. Many stay away from properties with structural problems and Japanese knotweed, etc.

- Rent al yield minimum. This is the ratio of the rent to the property price in a

  percentage.

- Other personal criteria...

​

STEP 2

Find potential properties that fit your criteria of a deal.

You can use Professional deal sources who charge a commission of 3-5% of the property price. You can also do it yourself for free by searching through propertis on rightmove and zoopla.

Property auctions are another good source of deals but only if the price is right and you have the means to complete the transaction within 20 working days or so.

Auctions are usually for people with either their own or investor cash, or using bridging lenders (Very expensive and risky for new property investors. Be Very careful!)

Finding a potential property deal may take minutes or days it all depends on the information and network of people you have access to.

​

STEP 3

Analyse the properties you have found. This means doing the numbers and researching the area. You need to make sure that the potential candidates are fit for both BRRRR and Buy To Sell Strategies (Or other property strategies like Serviced Accommodation).

This is the stage where you work out the numbers and values.

I have created  The BRRRR Calculator for this step.

​

The calculator has different sections

- The Property Valuation Estimates section

- The Desired Equity (the profit you want to make) section

- The Purchase expenses section

- The Rental information section

- The Finance and Refinance Information sections

- Monthly Hold Expenses (Bills when unrented) section

- Monthly Expenses when rented section

- Refurbishment estimates in the cost and time section

- The update and reset buttons.

- The Results section. This gives you what to offer based on the numbers you have entered into the calculator and some other statistical values like the yield, return on investment, estimated monthly and annual rental profit, both before and after refinancing and extracting the initial capital.

​

If you do not know what to put in the sections you can leave the current values or you can contact me for help HERE.

​

STEP 4

This step involves ringing the sellers or agents of the properties that you have analysed and fit your criteria and seeing if they would accept your offers (Offers from the calculator based on the numbers).

If there is no chance that your offer would be accepted or considered then there is no need to bother going to see the property. I would only go and view properties for which there is a good chance that my offer would be accepted.

​

STEP 5

Going to view the properties. Prebook and preplan your viewings to save time.

Take lots of photos and videos for each or if possible go with a professional with experience in refurbishing properties.

Many investors get a home buyers survey, which is a detailed report of the state of repair of the property and an estimated budget on the refurb and what could go wrong in the future. This costs around £600, but maybe worth it to protect you against a little mistake that could cost £1000s.

​

STEP 6

After the viewings, the next step is to start sending the offers.

Some people send the offers that day, some wait until the next day.

The way to send an offer on a property professionally is to send an email with

1. The offer amount

2. Proof of funds. This could be a bank statement, a mortgage decision in principle or a letter from a solicitor or an accountant.

3. Name and contact details of your solicitor or conveyancer

4. A brief message of your intention to buy the property.

The sending of the email is then followed up by a phone call at the same time to make sure that the email has been received, opened and read. Many offer emails get missed if not followed by a phone call.

NEVER REDUCE YOUR FIRST OFFER!

People take it personally if you do and you may end up losing people's trust and respect, which may, in turn, cost you money in the future.

​

STEP 7

The next step is chasing the feedback from the seller's or agents.

If your offer is accepted then good if not then start looking for other deals. Only about 1% of advertised properties are good deals.

​

STEP 8

Once your offer is accepted then make sure you have informed all those to be involved. This includes your solicitor or conveyancer, finance people and professionals that would do the refurb.

Plan ahead and line things up so there is always something happening. the more the property stays empty the more money you lose. Plan far ahead for expenses and keep in contact, at least 2 or more times weekly, with all relevant parties to make sure things are getting done.

 

STEP 9

Now the refurb. Make sure it is done quickly and with good quality products by skilled professionals. Make sure the job looks clean and great. This will help to get a better valuation when it comes to refinancing. Please don't buy gold toilets and diamond-encrusted doorknobs as a property can not be valued more than a certain amount no matter what you do to it.

Things that increase property value are additional bedrooms, good kitchens, bathrooms and making the property look bright and spacious. Open plans may sometimes devalue a property but this depends on the location so do the research and speak to the estate agents to hear what they think.

In terms of a refurb, I would never manage all the different professionals myself. I would hire a builder and get a quote for the whole job. This way I only need to manage 1 person as compared to 5 or 6 others. Many handymen and builders are very unreliable so do your research ahead and find a good recommended one (still not a guarantee that things would go smoothly). Make sure you plan for some extra time as refurbishments never finish on the estimated date as well as the budget. Always budget 15% more than the quote when calculating the expenses and unpredictable expenses could pop up.

​

STEP 10

Once the property is nearing completion of the refurbishment then you need to start advertising it for rent and getting it rented. You can advertise it yourself via openrent.co.uk or you can use the services of local estate agents (They will charge you about 1 month's rent). Another thing to think of is the management of the property. If you have the time you can manage it yourself and if anything breaks you can go on checkatrade and find someone to fix the problem or use estate agents who would charge you about 8-12%+VAT to manage the property + whatever it costs to fix any problems. Some agents charge an additional fee for being involved in the fixing of any problems.

 

STEP 11

Once the property has been successfully rented out and you are making a profit then it is time to refinance and extract your capital. Many banks and lenders want to see consistent rental income for 2 or more months before they agree to refinance. However, lenders and criteria vary and some may be easier to deal with than others. Since the crash of 2008, most lenders now want for a person or a company to have owned a property for at least 6 months before they refinance the property so this is something to consider in your planning process.

​

STEP 12

Once you have remortgaged the property and you have the money in your bank account you can start the process again. This means that if executed well an investor could buy a new property every 6 months or so.

Sometimes the BRRRR process may take longer or if the property is being valued too low by the lenders' surveyors, it may need to be sold for a profit instead. Always think of exit strategies if plan A does not work.

Many have made lots of money from property and many have lost money.