Why The BRRRR Method is a Lucrative No Money Down Property Strategy in UK?

What makes the BRRRR method such a great property strategy? And how can you use it to invest in property and start building a property portfolio without using your own money? Read on to learn more…

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Whether you are new to property investment or are a seasoned pro, you are likely to have come across the BRRRR method. Often referred to as ‘flips’, BRRRR is one of the most widely known property investment strategies out there.

Not only is this method tried and tested and one that many of our candidates here at Assets For Life have used to generate job-replacing income, it is also a great no money down property strategy that works, consistently. This means that you won’t need a pot of cash to invest in property, making BRRRR a great strategy that can work for anyone, irrespective of where they are in their property journey.

Before we take a deep dive into what the BRRRR property technique has to offer and why it makes a great no money down strategy, let’s take a look at the BRRRR meaning.

BRRRR Meaning

The term BRRRR stands for Buy, Refurbish, Rent, Refinance and Repeat. BRRRR is a property investment method that involves buying property that is in need of some TLC, increasing its value by carrying out necessary renovations, renting it out, refinancing in order to generate a profit and repeating the process again and again. Sounds complicated? Let’s break the BRRRR meaning down step-by-step…

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Buy

Now that we’ve covered the BRRRR meaning and basics, let’s delve into the specifics. The first step when it comes to the BRRR method involves acquiring a property. Ideally the property will be below market value, increasing chances of a high return on your initial investment. At this stage, you’ll need to consider things like location and the level of refurbishments required.

The good thing is, as mentioned earlier in this article, you don’t need to have a large pot of cash lying around to do this. You can purchase an investment property using other people’s money. How? You may ask.

There are various ways you can do this, one of the most popular no money down techniques available is a bridging loan. A bridging loan is short-term funding used to finance the gap between buying a house and securing a traditional mortgage. There are many lenders available that offer bridging loans. It’s worth noting that the terms and requirements will vary from provider to provider.

Our co-founder, Liam Ryan, goes into more detail on various no money down property techniques you can use to invest in property in his best-seller, Bricks, Mortar and Other People’s Money. Now available via Amazon.

*At this stage, you’ll need to make sure that your numbers stack up and that you factor in the cost of refurbishments as well as other fees into your calculations.

Refurbish

Once you have secured your property, you can now commence refurbishments. This stage in the BRRRR strategy is critical. It not only significantly impacts whether your property’s value increases and if so by how much, but also the rate of your return on the initial investment.

Things can get quite complex at this stage in the BRRRR strategy depending on the size of the project that you are undertaking. For example, a new kitchen fitting can generally be quite straightforward, however more costly and complicated home repairs such as foundation or roof repairs will likely require help from experts and can end up costing you thousands.

Popular refurb projects you are likely to come across include:

Fitting a new kitchen

Adding an extra bedroom

Installing a new bathroom

A garden makeover

A new boiler or heating system

An attic/cellar conversion

Landscaping

A new home extension

Rent

Now that refurbishments to your property are complete, it’s time to rent out your property and start generating cash flow.

It’s important to do your due diligence at this stage of the BRRRR strategy to ensure that you have a reliable and trusted tenant that plans to be in the property long-term. There are various great platforms you can use for free including OpenRent, Spare Room, Facebook Marketplace and Gumtree.

Asking for references is a great way to weed out the tenants you want to avoid. You’ll generally want to look out for:

Not enough income/unemployed

Eviction history

Bad credit

Criminal history

Dishonesty

Refinance

Now that you have a tenant in your property, you can now look to refinance it. At this stage in the BRRRR property strategy, you will have pushed up the property in value meaning that you can borrow (e.g. with a buy-to-let mortgage) based on the property’s new and improved market value. You are then able to pull your initial investment out which can be used on funding other properties.

It’s worth noting that there is usually a ‘seasoning period’ required which is the amount of time you’ll need to own the property before lenders will offer you the chance to refinance.

Repeat

Now that you have successfully refinanced your property, you can take out the profit and repeat the process again and again, starting with the buying stage and working your way down. As you gain more experience, it’s easy to see how the BRRRR method strategy becomes much easier and quicker to execute.

Benefits of the BRRRR property strategy

Low initial investment – low initial investment is required, usually the deposit along with any necessary fees, which can be funded using a bridging loan.

Potentially high returns – when well executed, the BRRRR method can yield some high returns on your initial investment. The key is to know your numbers and make sure you factor in all costs before committing.

Rental income – potential for recurring income from rent from the right tenant(s). With rental growth close to peaking at 12.3% per annum according to Home Track, there is huge potential for growth with the BRRRR property strategy.

You can use insurance to cover void periods – with the right insurance in place, you can cover against loss of rental income, legal costs or damage.

Great way to build a pot of cash – the BRRRR strategy allows you to get into property investment without needing huge savings, enabling you to start building a pot of cash quite quickly. This can then be used to fund other properties using the same technique and build a lucrative property portfolio.

Cons of the BRRRR property strategy

Hard work – the BRRRR method requires hard work, from sourcing below market value property that you can secure a bridging loan for, through to renovations and securing a mortgage. The process can be quite tedious.

Expertise required – there are many things to consider with the BRRRR strategy and you should be well-informed before starting your journey. Thankfully, our free property training helps equip you with everything you need to thrive in property.

Some projects can become very complex – Due to the complexity of some BBRRR projects, it’s highly recommended that you are knowledgeable about the property space before committing and have a strong network of experienced property professionals.

Being a landlord is a big responsibility – it goes without saying that being a landlord is a big responsibility and there are a lot of responsibilities involved to ensure you are taking care of your property and the tenants who occupy them.

Down valuation – this is perhaps the biggest risk when it comes to the BRRRR method. While the strategy relies on upgrading a property to increase its value and generate profit, there are no guarantees and a down valuation is still a possibility.

Now that you have an in-depth understanding of the BRRRR meaning, what it consists of and how you can use it to generate wealth, you may be interested to learn more about the simplified version of this popular property investment strategy (BRR) via the link below:

BRR (Buy, Refurbish, Refinance) Property Strategy Explained.

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