BRRR: Buy, Refurbish, Rent, Refinance

BRRR stands for buy, refurbish, rent, refinance. You buy a property that needs work, often below market value, refurbish it to add value, let it out, then refinance onto a buy-to-let mortgage at the new, higher valuation. The refinance releases some or all of the cash you put in, which you can use on the next property.

These numbers are illustrative only, assuming the purchase was funded with cash or bridging:

• •Purchase price: £150,000, plus around £10,000 for stamp duty, legal fees and a survey
• •Refurbishment: £30,000, so £190,000 in total
• •Valuation after the works: £240,000
• •Refinance at 75% loan-to-value: £180,000, leaving £10,000 of your money in the property
• •If the surveyor values it at £220,000 instead, 75% is £165,000 and you leave £25,000 in

• •Properties that need major work often can't get a normal mortgage, so investors use cash or a bridging loan. Bridging is short-term and expensive, so it needs a clear exit.
• •Many lenders want you to have owned the property for around six months before they will lend on the new value. Some specialist lenders will refinance sooner. Agree the refinance route with a broker before you buy, not after the works.
• •The amount you can borrow is limited by the rent as well as the valuation. Lenders stress-test the rent against the mortgage payments, so a higher interest rate can mean a smaller refinance.

The surveyor values the finished property on what similar properties nearby have actually sold for, not on how much you spent. Check sold prices of finished homes on the same street before you buy, and don't overspend on a refurbishment the local market won't pay for.

• •Refurbishment overruns. Build in a contingency of 10–20% of the works budget.
• •Down-valuations at refinance, which leave more of your money in the deal.
• •Delays: every extra month on a bridging loan adds interest.
• •Overestimating the end value (GDV) by comparing with properties that aren't truly similar.