BRRRR stands for Buy, Refurbish, Rent, Refinance, Repeat. It’s a proven property investment strategy that’s been around for years, under many different names. While the acronym BRRRR comes from the US, the strategy is also popular with UK investors – it’s a great way to grow a property portfolio without an endless pot of money upfront.
At first, the acronym had only two Rs – BRR (Buy, Refurbish, Refinance). “Rent” was added later as a way to offset expenses, and nowadays, the acronym also includes “Repeat” to demonstrate the strategy’s scalability. While the name has evolved over time, the idea has stayed the same: if you invest wisely you can build a profitable portfolio over time.
In this blog, we’re putting BRRRR under the microscope, examining each step in detail to give you all the facts. But first, let’s find out why this investment strategy is so popular.
Why is the BRRRR method so popular?
The BRRRR method is popular because it helps investors make the most of their money – and in today’s competitive property market, maximising capital is absolutely essential! With house prices rising and the country facing economic uncertainty, the BRRRR approach allows investors to stretch their budget further while continuing to grow their property portfolio.
Another great thing about this investment strategy is that it’s easy to follow – it’s achievable for both beginners and experienced investors. When you’re equipped with a clear plan, property investing feels more manageable and less overwhelming.
How does the BRRRR method work?
Is BRRRR the right approach for you? Let’s look at each step in detail to help you make an informed decision.
Step 1: Buy
This step sets the foundation for the entire BRRRR strategy – it’s all about finding an investment property with the potential to deliver strong returns once it’s refurbished, rented out, and refinanced.
The key here is to buy below market value (BMV), as this creates the initial “cushion” that makes the strategy work. You should also consider the following property characteristics:
- Is the area in demand? Consider things like transport links, schools, and nearby amenities.
- Does the property have scope for improvements that will increase its value? Think cosmetic updates, energy-efficient upgrades, or even layout changes like converting the property into an HMO.
- Do the numbers stack up? Research local property values and rental yields to protect your investment down the line.
Pro tip: Explore off-market deals, attend auctions, or build relationships with local estate agents. Sometimes, the best deals come from knowing the right people!
Things to avoid:
Overpaying: Getting emotionally attached or rushing into a deal can lead to overpaying. Remember, the numbers need to work! Take the time to assess whether the deal makes financial sense and avoid letting excitement cloud your judgment.
Underestimating refurbishment costs: It’s easy to overlook the true cost of repairs or improvements, especially if you’re new to property investing. Always get a professional estimate for the refurbishment, and build in a contingency plan for unexpected expenses.
Skipping due diligence: Thorough due diligence is essential at this stage. This includes getting a detailed property survey, checking for legal or planning issues, and researching local market trends to ensure the property has potential for growth. Cutting corners here can lead to costly mistakes down the line!
How we can help:
Navigating the property market can feel overwhelming, especially if you’re new to investing. That’s where we come in. Our property sourcing services can help you find properties with real potential. Whether it’s spotting hidden gems or analysing the figures, we can help make the “Buy” step as smooth and successful as possible.
Step 2: Refurbish
The refurbishment stage is where the magic happens – it’s where you add value to your property! By making targeted improvements, you can boost both its market value and appeal to potential tenants.
High-impact refurbishments typically include modernising kitchens, updating bathrooms, and improving energy efficiency with features like better insulation or double glazing. These upgrades not only attract tenants but can also lead to higher rental income.
Pro tip: Start with a realistic refurbishment budget. Factor in everything from materials to labour, and always make a plan for unexpected expenses!
Things to avoid:
Cutting corners: While it’s tempting to save money upfront by skipping certain works or opting for the cheapest materials, this can backfire in the long run. Poor-quality work or unresolved issues can lead to expensive repairs later.
Failing to plan: Not completing all essential refurbishment tasks upfront can lead to delays and disruption. If major works are left unfinished, it can put off potential tenants or even impact your refinancing efforts.
Choosing unreliable contractors: A good contractor can make or break your refurbishment project. Rushing to hire the cheapest option without vetting their qualifications or references can lead to poor workmanship, delays and budget overruns. Always choose contractors you trust and have a clear project timeline in place.
How we can help:
Refurbishments can be stressful, especially if you’re juggling other commitments or live far away. That’s where our refurbishment management services come in! With our project management experience and network of trusted contractors, we can help make sure your refurbishments are completed on time, within budget, and to a high standard.
Step 3: Rent
After refurbishment, it’s time to rent your property out. This step involves furnishing the property to suit your target market, marketing it effectively, and ensuring compliance with all regulations. A well-prepared property will attract the right tenants and help secure a steady income stream.
Setting the right rental price is key. It needs to be competitive enough to attract tenants but high enough to cover your expenses and contribute to long-term growth. You can research local rental prices to find the sweet spot.
Good property management is another essential part of renting. Keeping on top of compliance, regular maintenance, and tenant satisfaction will ensure your property remains profitable. Happy tenants are more likely to stay, and this reduces costly turnover and void periods.
Things to avoid:
Setting rental prices too high: Overestimating what tenants are willing to pay can result in long void periods, where the property sits empty and generates no income. Aim for a competitive rate that balances profitability with demand.
Overlooking compliance: Renting out a property comes with a range of legal obligations, from gas safety checks to energy performance certificates. Missing any of these can lead to fines, legal trouble or delays in renting out your property.
How we can help:
Renting out a property involves a lot of moving parts, but we’re here to help! From tenant vetting and marketing to inventories and maintenance, our property management services for family homes, HMOs and serviced accommodation cover it all. We’ll handle the day-to-day operations while you focus on growing your portfolio.
Step 4: Refinance
Refinancing is where you unlock the value you’ve added through refurbishment. By refinancing at the property’s new, higher value, you can release equity and use it as capital to fund your next investment!
The refinancing process involves getting a valuation of your property, applying for a mortgage, and securing favourable loan-to-value (LTV) ratios. This stage is most effective once the property has been refurbished and rented out, as both the increased value and rental history will strengthen your case for a higher valuation.
Pro tip: Refinancing requires discipline. It’s tempting to use the released funds elsewhere, but keep your focus on reinvesting into your portfolio. That’s how the BRRRR strategy helps you scale so effectively!
Example calculation:
Initial costs
- Purchase price: £120,000 (£90,000 mortgage / £30,000 deposit)
- Stamp Duty Land Tax (SDLT): £6,000 (after April 2025)
- Conveyancing: £1,500
- Broker fee: £1,000
- Refurbishment: £40,000
Total expenditure: £168,500 (£90,000 mortgage / £78,500 personal investment)
After refurbishment
- Fair Market Value (FMV): £230,000
- Loan-to-Value (LTV) ratio: 75%
Borrow up to: £172,500
Refinance costs
- Legal fees: £1,000
- Broker fee: £1,000
Net funds after refinancing: £170,500
Next steps
- Repay the original mortgage (£90,000)
- Reinvent the remaining funds (£80,500)
In this example, you’re left with slightly more money than you started with, which means you can recover your initial investment for the deposit, refurbishment costs and any associated fees, with money to spare! Essentially, you’ve achieved an infinite return on investment – which is sometimes referred to as a no money down deal. You can then reinvest all of the funds and repeat the process.
While it’s not always possible to recover all your money from each deal, aiming to do so will help you scale your property portfolio far quicker than if you left most of your initial capital tied up in each property.
Things to avoid:
Refinancing too early: Applying for refinancing before your property’s value and rental history are well-established can hurt your chances of securing a strong valuation. Wait until the refurbishment is complete and tenants are in place to maximise the property’s worth.
Borrowing too much against your property: This can put your portfolio at risk if market conditions change or interest rates rise. It’s important to keep a healthy balance between equity and debt to protect your investments.
How we can help:
We know the refinancing process can feel complex, but we’re here to guide you. Our expertise can help you navigate valuations, secure competitive mortgage deals, and maximise the funds available for reinvestment.
Step 5: Repeat
By reinvesting the money you’ve freed up through refinancing, you can repeat the process and grow your portfolio one property at a time. But remember, a slow and steady approach is best. Taking on too much debt or rushing into deals without due diligence can put unnecessary strain on your finances. It’s also vital to stay aware of what’s happening in the market to manage risk and keep cash flow healthy.
Pro tip: Spreading your investments across different locations, property types and/or tenant groups can help reduce risk and make your portfolio more secure.
Things to avoid:
Scaling too quickly: While the goal of BRRRR is to repeat the process, growing too fast can put your portfolio under financial strain. Take your time to ensure each step is done properly before moving on to the next deal.
Over borrowing: Relying too heavily on borrowed funds can make your portfolio vulnerable to market downturns or interest rate hikes. Maintain a cautious approach and ensure you have enough reserves to handle unexpected challenges.
How we can help:
Whether you’re taking your first steps into property investing or are already ready to scale, our end-to-end property services can support you. From sourcing your next property to helping you refine your strategy, our team can guide you through each stage of the BRRRR process, so you can build a investment portfolio that you’re proud of.
Is a BRRRR investment strategy right for you?
The BRRRR investment strategy could be a great fit if you’re willing to put in the time and effort required to optimise each step. Its main strength is scalability – you can build wealth by reinvesting equity and repeating the process again and again.
However, this strategy isn’t for everyone. It requires a disciplined approach, thorough research, and careful risk management. If you’re unprepared to handle potential challenges like refurbishment delays or market fluctuations, it may be worth considering other investment options.
Partner with Purseglove to start your BRRRR investment strategy
If you’re ready to explore how BRRRR could work for you, we’re here to help. From sourcing the right property to managing refurbishments and guiding you through refinancing, our team can support you every step of the way. Get in touch today to get started!