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BRRRR Buy Refurbish Rent Refinance Repeat -Investment Strategy Calculator
- hustleandbustle.co.uk
- Dec 12, 2024
- 5 min read
Updated: Jan 16
The BRRRR investment strategy, also known as Buy, Refurbish, Rent, Refinance, Repeat, is a popular real estate investment method that allows investors to build wealth and generate passive income efficiently. This step-by-step framework enables property investors to scale their portfolios by recycling their initial capital repeatedly.
Try our BRRRR Calculator to work out your next deal
Is is also know as BRRR - Buy, Refurbish, Rent, Refinance.
What Is BRRRR - Buy Refurbish Rent Refinance Repeat?
BRRRR stands for Buy, Refurbish, Rent, Refinance, Repeat. The strategy focuses on purchasing undervalued properties, improving their value through rehabilitation, generating rental income, extracting equity via refinancing, and using that equity to reinvest in additional properties. This cycle creates a sustainable method of growing a real estate portfolio with minimal upfront cash for subsequent investments.
How Does the BRRRR Strategy Work?
1. Buy
The first step in the BRRRR strategy is to buy an undervalued property. Look for run down properties that need some tender loving care, distressed sales, auction properties or homes where you can create more useable space, as these often have significant potential for improvement. The goal is to purchase below market value or enhance the value to maximize profits after renovation.
Example - purchasing a property that needs renovation or even where you can create an extra bedroom.
2. Refurbishment
Refurbishment involves repairing and upgrading the property to increase its value. Common projects include fixing structural issues, modernising interiors, and enhancing curb appeal. Your aim is to have this property looking like you can move in straight away, kitchens and bathrooms should be updated and all rooms refurbished to a good level, finished in neutral colours.
The key here is not to get emotionally attached or to try and stamp your own personal identity in the refurbishment.
Have a clear defined budget in place and do not go overboard with high end fixtures and fittings, remember this property is to be rented out so finish the build to a standard that suits the rental market.
Have a look at or Build Cost Calculator to work out approximate costs for your refurbishment.
3. Rent
Once the property is improved, it’s rented out to generate a steady income. The rental income should cover operating costs, including mortgage payments, taxes, and insurance, while ideally leaving a positive cash flow.
Before even purchasing the property ensure you do your due diligence on the current market conditions and speak to local agents to ascertain the monthly rentals that can be achieved.
4. Refinance
Refinancing allows you to extract the increased equity from the property. By securing a new mortgage based on its higher value, you recover your initial investment, which can then be used for future acquisitions.
Occasionally you may not get the valuation you aimed for. Again ensure you have done your homework on current property values and if you need to, provide comparable and evidence to back up your case. Valuers are prepared to listen if you can prove a higher value than what they have proposed.
5. Repeat
The final step is to reinvest the equity into another property, repeating the BRRRR process to build a portfolio of cash-flowing assets.
Once you have refinanced the property, and you have recovered most or all of your initial investment, it is time to move on to the next deal. Always be on the look out for the next deal and be prepared to move quickly on to the next property to maximise the return on your capital.
Example BRRRR Calculation in £
Let’s illustrate a BRRRR investment with specific figures:
Purchase Price: £100,000
Refurb Costs + Finance: £25,000
Initial Deposit: £25,000
Total Cash Investment: £50,000
After Repair Value (ARV): £160,000
Refinancing (75% of ARV): £120,000
Funds for the Next Deal: £40,000
Funds Retained in Property: £10,000
Rental Income: £1,000/month
Monthly Costs: £600/month
The above figures are based on a cash purchase. Obviously if you have used a lender then work out the figures based on the initial deposit and do not forget the finance costs.
Use our free BRRRR Calculator to work out if a deal is viable.
Outcome: Your investment is partly recovered after refinancing, and you generate £400/month in passive income. The funds from refinancing allow you to start the BRRRR process again with a new property.
Best Places to Invest in BRRRR Properties
Location plays a critical role in the success of BRRRR investments. Here are key considerations and recommended areas:
1. High Rental Demand Areas
Focus on regions with strong rental demand, such as university towns, growing suburbs, and areas with robust job markets.
2. Up-and-Coming Neighborhoods
Investing in neighborhoods undergoing regeneration offers potential for significant property appreciation. These areas typically have lower entry costs and a promising future.
3. Established Rental Markets
Choose areas with a proven track record of consistent rental demand and appreciation. In the UK, some of the best places include:
Manchester: A thriving job market and extensive regeneration projects.
Liverpool: High rental yields and affordable housing.
Birmingham: Infrastructure growth and increasing population.
Glasgow: Strong rental demand with competitive property prices.
Nottingham: Popular with students and young professionals.
Where to Find BRRRR Properties
1. Online Property Portals
Websites like Rightmove, Zoopla, and OnTheMarket feature properties, including distressed and undervalued homes ideal for BRRRR.
2. Auctions
Property auctions are excellent for finding below-market deals. There are a number of Auction Houses that offer a quick and easy option to purchase properties, however ensure you view the property beforehand, read the legal pack and have your finances in place.
3. Local Estate Agents
Build relationships with estate agents to learn about off-market deals and newly listed properties.
4. Direct-to-Seller Strategies
Reach out to homeowners directly through leafleting, social media campaigns, or property-buying services to find motivated sellers.
5. Networking Events
Attend real estate meetups and networking events to connect with wholesalers, other investors, and professionals who can help source properties.
Who Can Benefit From the BRRRR Strategy?
1. New Investors
BRRRR is perfect for beginners looking to build a portfolio with limited capital.
2. Experienced Investors
Seasoned investors can use BRRRR to scale their portfolios quickly and efficiently.
3. Passive Income Seekers
The strategy generates consistent cash flow, making it ideal for those seeking financial independence.
4. Wealth Builders
BRRRR focuses on equity growth, making it a powerful tool for long-term wealth creation.
Advantages of BRRRR
Scalability: Recycled capital allows for rapid portfolio expansion.
Cash Flow: Properly executed BRRRR properties provide steady passive income.
Equity Growth: Rehabbing properties builds equity quickly.
Tax Benefits: Depreciation and mortgage interest deductions reduce taxable income.
Potential Risks of BRRRR
While the BRRRR strategy has many advantages, it comes with potential challenges:
Market Downturns: Falling property values can complicate refinancing.
Unexpected Costs: Renovation budgets may exceed initial estimates.
Vacancy Risks: Extended vacancies can affect cash flow.
Loan Challenges: Refinancing terms might not always be favorable.
Using our BRRRR Calculator
To streamline your investment decisions, use our BRRRR calculator. Input key variables such as purchase price, refurb costs, rental income, and ARV to estimate potential returns and cash flow. Our calculator simplifies the process, helping you make informed choices for each project.
Final Thoughts
The BRRRR strategy—Buy, Refurb, Rent, Refinance, Repeat—is a proven framework for building wealth through real estate. Whether you’re new to investing or looking to scale your portfolio, mastering this strategy can lead to financial independence and long-term success.
Start small, do your research, and use tools like our BRRRR calculator to maximise returns. With dedication and a strategic approach, you can create a thriving real estate business with the BRRRR method.
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