The Key to Successful BRRR is the B, Not the R
Thursday 27th February 2025
It’s nice to be back after 10 days in the sun with my family and reflecting on the year ahead. I work in bursts, often long hours and at weekends (except my kids’ rugby matches!) so that I can spend the entire school holidays doing stuff as a family. That was always my goal. Nothing else, just that.
Trinkets and baubles are here today, gone tomorrow, and have never interested me. I can buy them but choose not to, as impressing others has never been my gig, whether in the Army or business. I am very content in my own skin, and I’m grateful that I really enjoy all aspects of my life. The work/life balance is perfect, and retirement is nothing I will ever consider. As I say to friends, what would I do all day?
It’s worth taking some time to reflect on why you do what you do?
Do you really have a tangible goal?
Do you visualise it?
When will you achieve it and how will you know?
How will you achieve it?
A bit deep and meaningful for a Thursday morning?
Back to business:
When is a deal, not a deal?
I spoke with a person yesterday on a Zoom call. We discussed the merits of buying property in the wholesale market, not retail. As luck would have it, they were offered a ‘deal’ by a sourcing agent in a street where we had recently bought the identical property wholesale.
The numbers illustrate the stark contrast between buying through an estate agent or buying at auction. I don’t want to go into detail, but some of the renovation costs beggar belief. Even the selective licence was marked up by almost 40%.
The numbers
Sourced retail market property after ‘renovation’ and at the suggested purchase price = £114,000 (before purchase costs).
The wholesale auction market purchased prior to auction £65,000 (before purchase costs) and no renovation, yield 13%.
In many places in the North, if your gross yield is not in double digits, you're overpaying for the property and need to revise your approach.
A before costs difference of £49,000 or 75% higher than buying wholesale.
BRRR
A lot of people don’t understand BRRR. The key to it is the B, not the R, and low-value areas have low-value ceilings!
