Property Investment Liverpool | Property Management Liverpool | Tuna Fish Property

This is the most important step in the process. For the BRRR method to work successfully, you need to buy a property under market value with the potential for increased value with minimal investment.

To determine which property to buy, the evaluation process should be similar to how you’d judge buying a property to flip.

Most discounted properties can be found at property auctions. Many auction properties are former rental properties, repossessed properties, or distressed assets.

It’s important to choose a property that has the potential for an increased resale value. Any work required should be minimal and carefully scoped before submitting a bid and buying the home.
It’s generally a good idea to seek help from a property investment agency (like Tuna Fish Liverpool) to source a property with strong potential for increased value and rental opportunities.

The idea of the BRRR method is to invest as little as possible to bring the property up to market value. You want to add value, but you don’t want to max out the value available. This is important as you’re only refinancing the property, not selling it on the market.

When flipped properties are sold on the market, there is some uncertainty over the final price, as there could be high competition (depending on current market trends).

However, when refinancing the property, the lender sets the market value. Therefore, any expensive upgrades that could get you bids slightly over market value will be disregarded by lenders.

Plus, because the property will be rented out, it’s important to keep quality in line with market rental rates. Renovating a property to a high standard will reduce the pool of tenants who can rent your property, making it harder to fill over the years.

To be successful with BRRR, it’s important to stick to refurbishments that make the property functional, habitable, and future-proofed.
For example, the building will need to meet UK rental property standards, so everything must be in working order.

Plus, because you’ll be keeping the property (not selling it on as quickly as possible), you want the refurbishments to last. Therefore, you don’t want to scrimp on a new roof or boiler knowing it’ll cause you problems in a year or two.

To attract better tenants and achieve a higher rental income, good places to modernise include the bathroom, kitchen, bedroom, and lounge areas, without adding too much personality or decorative features.

Once the property meets standards and is ready, it’s time to find good tenants and rent the property out.

Seek help from a local lettings agent (like Tuna Fish Liverpool) to find good tenants and get maximum returns from your rental yields.
Because the property is newly renovated, it’s important to find tenants who won’t cause damage to the property.

Keeping the property in good condition for longer will ensure you get the best return on investment (ROI) from your renovations.

Because the renovations should have increased the property value, there will be additional equity available. Refinancing the property means you can use the equity to buy a new property and repeat the BRRR process. It’s important to explore refinancing options before purchasing an asset. Many lenders have a seasoning period that states how long you need to own a property before equity can be released.
Typically, refurbishing a property takes several months. As a minimum, cosmetic changes take up to 3 months. More intense work can take up to 6 months.

Unless the property is heavily discounted, you should avoid buying a house that takes longer than 6 months to renovate. Since refurbishing a property takes time anyway, many investors practising the BRRR method don’t need to worry about the seasoning period of lenders. However, it’s best to talk to several lenders and seek help from a local estate agent.

The good news is that, even with a seasoning period of up to a year, investors can generate rental income from the property until it’s ready to refinance.