The Best Property Strategy for Beginners | BRRR explained

00:05:54
https://www.youtube.com/watch?v=7881CYOdA28

Summary

TLDRIn this video, the speaker provides a comprehensive guide for beginners in property investment, focusing on the BRRRR method: Buy, Renovate, Rent, Refinance, and Repeat. The video explains the importance of purchasing older, dilapidated properties and how to add value through various renovation techniques. It covers financing options, emphasizing the refinancing process to pull out cash for future investments. The speaker also discusses budgeting for refurbishment and hidden costs, encouraging viewers to buy properties below market value for better returns. Overall, the BRRRR method is presented as a less risky and effective strategy for new investors.

Takeaways

  • 🏠 Understand the BRRRR method: Buy, Renovate, Rent, Refinance, Repeat.
  • 🔧 Focus on older, dilapidated properties for investment.
  • 💰 Renovate to add value: repairs, cosmetics, spatial improvements.
  • 📈 Refinance to pull out cash after renovations.
  • 💵 Budget 10% for refurbishment and 5% for hidden costs.
  • 🔄 Repeat the process to build a property portfolio.

Timeline

  • 00:00:00 - 00:05:54

    In this introductory video on property investment for beginners, the speaker outlines the BRRRR method, which stands for Buy, Renovate, Rent, Refinance, and Repeat. The focus is on purchasing older, dilapidated properties that require modernization. The renovation process is broken down into four main techniques: fixing broken elements, cosmetic improvements, spatial improvements, and increasing floor space. The speaker emphasizes the importance of the first two techniques due to current builder shortages. After renovations, refinancing is discussed, where a new loan is obtained based on the property's increased value, allowing investors to recover their initial investment and generate passive income through rental properties. The final step is to repeat the process, with budgeting tips provided for refurbishment and hidden costs, aiming to buy properties at a significant discount to maximize returns. The BRRRR method is presented as a low-risk entry point for new investors.

Mind Map

Video Q&A

  • What does the BRRRR method stand for?

    BRRRR stands for Buy, Renovate, Rent, Refinance, and Repeat.

  • What type of properties should beginners look to buy?

    Beginners should look for older, run-down, or dilapidated properties that need modernization.

  • What are the four main renovation techniques?

    The four techniques are simple repairs, cosmetic upgrades, spatial improvements, and increasing floor space.

  • How much can you typically refinance a buy-to-let property for?

    You can refinance for roughly 75% of the property's uplifted value.

  • What should you budget for refurbishment costs?

    Budget around 10% of the property price for refurbishment costs.

  • What is a good strategy for beginners in property investment?

    The BRRRR method is a great strategy for beginners as it involves less risk.

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  • 00:00:00
    welcome to my first video on property
  • 00:00:02
    for beginners in this video i'm going to
  • 00:00:04
    be covering the best property strategy
  • 00:00:06
    for beginners how to finance your
  • 00:00:08
    property deal and what kind of returns
  • 00:00:10
    you should be expecting
  • 00:00:12
    if you've already started researching on
  • 00:00:14
    how to start a property you've probably
  • 00:00:15
    heard of the brewer method being thrown
  • 00:00:18
    around a lot
  • 00:00:19
    it stands for buy renovate rent
  • 00:00:22
    refinance and repeat
  • 00:00:25
    so what does this mean and how can you
  • 00:00:27
    actually apply it first up it's buy
  • 00:00:30
    you're not looking to buy modern
  • 00:00:31
    properties or newborn properties you're
  • 00:00:33
    looking to buy older properties run down
  • 00:00:36
    properties dilapidated properties and
  • 00:00:39
    properties that are kind of in need for
  • 00:00:41
    some modernization and some tlc you then
  • 00:00:44
    look to add value to the property which
  • 00:00:45
    then in turn increases the price you
  • 00:00:48
    could sell the property at so how do we
  • 00:00:50
    add value this brings us on to the first
  • 00:00:52
    r which is renovate
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    there are a couple of different ways
  • 00:00:56
    which you can renovate a property i'm
  • 00:00:57
    going to cover the four main ways
  • 00:01:00
    i've done all of these but it really
  • 00:01:01
    depends on your own preference and kind
  • 00:01:03
    of boils down to two main things which
  • 00:01:05
    is a your budget and b your time so one
  • 00:01:09
    of the main ways to renovate a property
  • 00:01:10
    is just by fixing what's broken
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    which is kind of a simple repair
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    renovation technique so whether it's a
  • 00:01:18
    heating that needs to be fixed maybe
  • 00:01:20
    it's a new electric fuse box maybe
  • 00:01:22
    there's some
  • 00:01:23
    dodgy windows that could do with a
  • 00:01:25
    double glazing
  • 00:01:26
    it's essentially just doing the bare
  • 00:01:28
    minimum that puts your property into a
  • 00:01:30
    place where you can rent it out the
  • 00:01:33
    second renovation technique is what i
  • 00:01:34
    like to call cosmetics so it's how the
  • 00:01:36
    property looks from the outside walking
  • 00:01:38
    in towards the property and also how it
  • 00:01:40
    looks from the inside as a first
  • 00:01:42
    impression to a potential buyer so this
  • 00:01:45
    includes like a new paint new carpet and
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    maybe there's quite an outdated kitchen
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    which could do with some modernization
  • 00:01:52
    or maybe there's an old-fashioned
  • 00:01:53
    bathroom which could do with a complete
  • 00:01:54
    revamp it's all about how the property
  • 00:01:57
    looks and feels the third renovation
  • 00:01:59
    technique is a spatial improvement and
  • 00:02:02
    this is essentially playing around with
  • 00:02:05
    the existing layout of the property so
  • 00:02:07
    the existing envelope for the property
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    in a way that maximizes the rent you
  • 00:02:11
    could achieve from it so maybe there's a
  • 00:02:15
    separate kitchen and a lounge and you
  • 00:02:17
    could break down the wall in between to
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    give it more of an open space feel or
  • 00:02:21
    maybe there's two reception rooms and
  • 00:02:23
    you convert one of the reception rooms
  • 00:02:25
    into a bedroom
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    another common one that i do is when
  • 00:02:28
    there's a really big master bedroom with
  • 00:02:31
    two windows you can put a partition wall
  • 00:02:32
    in between and split it up into two
  • 00:02:35
    single bedrooms which in turn increases
  • 00:02:37
    the rent you can get from the property
  • 00:02:39
    the fourth and final way
  • 00:02:41
    and probably the most expensive and
  • 00:02:43
    time-consuming way is increasing the
  • 00:02:45
    floor space of the property so this
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    could be via an extension
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    at the back or adding in a conservatory
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    or maybe there's a loft that you can
  • 00:02:52
    build into and convert that into another
  • 00:02:54
    bedroom the two that i'll be focusing
  • 00:02:57
    mostly on in 2022 is the first two so
  • 00:03:00
    repairing what's broken and cosmetics
  • 00:03:04
    especially with the shortage in builders
  • 00:03:06
    at the moment and the extended delivery
  • 00:03:07
    time frames and this is a quick way to
  • 00:03:10
    go into a project do it up uplift the
  • 00:03:12
    value and pull your money out and move
  • 00:03:14
    on to your next one once you've
  • 00:03:15
    renovated your property in a way which
  • 00:03:17
    you could get the maximum rent from it
  • 00:03:20
    you then look to refinance the property
  • 00:03:23
    refinancing in this context is when you
  • 00:03:25
    get a new loan on the uplifted value of
  • 00:03:28
    the property so after you've done all
  • 00:03:29
    your renovation works to replace the
  • 00:03:32
    existing loan which you took out to buy
  • 00:03:34
    the property in the first place there's
  • 00:03:35
    a couple of different ways that you can
  • 00:03:36
    buy a property and i'll be going into
  • 00:03:38
    those financing methods in another video
  • 00:03:41
    but for the purposes of this i'm just
  • 00:03:42
    going to be sticking to the refinancing
  • 00:03:45
    element so the loan you get on a buy to
  • 00:03:47
    let property is roughly capped around 75
  • 00:03:51
    of the property price
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    so say you bought a property for 100 000
  • 00:03:55
    and you take out a buy to let loan
  • 00:03:58
    you're going to get about 75 000 pounds
  • 00:04:00
    in terms of the loan value and the
  • 00:04:02
    remaining 25 000 you'd have to put in it
  • 00:04:04
    as cash
  • 00:04:06
    once you've uplifted the value of the
  • 00:04:08
    property your new loan would be 75
  • 00:04:12
    on the uplifted value
  • 00:04:14
    so say after the works your property
  • 00:04:16
    price is 150 000 then your loan value
  • 00:04:18
    will be 75 of 150 000 which is 112 500.
  • 00:04:24
    so the idea here is to uplift the value
  • 00:04:27
    refinance and pull all your money out
  • 00:04:29
    including the refurbishment costs that
  • 00:04:31
    you've put into the property
  • 00:04:33
    and then move on to your next project
  • 00:04:35
    you'd still have on the side a
  • 00:04:38
    cash generating asset and which will
  • 00:04:40
    give you a rental income
  • 00:04:43
    kind of a passive income going forward
  • 00:04:45
    the final r is repeat every time you
  • 00:04:48
    take the money out of the deal you then
  • 00:04:49
    put it into a new one and you repeat the
  • 00:04:51
    process over and over and over again as
  • 00:04:53
    a rough rule of thumb for my projects i
  • 00:04:55
    usually budget around 10 of the property
  • 00:04:58
    price towards the refurbishment costs
  • 00:05:00
    the second thing i'll budget for is the
  • 00:05:03
    hidden cost so around five percent of
  • 00:05:04
    the property price i would factor in for
  • 00:05:07
    the surveyor cost the solicitor fees the
  • 00:05:09
    stamp duties um and i'll put these on
  • 00:05:12
    i'll take these all into account when
  • 00:05:14
    doing my deal analysis so the ideal deal
  • 00:05:16
    you want to get all of your money out
  • 00:05:18
    so you'd look to buy a property at
  • 00:05:20
    around 30 to 35 below market value to be
  • 00:05:23
    able to do that
  • 00:05:25
    for the projects that i've done i
  • 00:05:26
    usually see myself having about five to
  • 00:05:28
    ten percent of my money left in and then
  • 00:05:31
    i just refinance it take it out and then
  • 00:05:33
    move on to the next project there's
  • 00:05:35
    loads more to say about investing in
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    property but if you're new to the game
  • 00:05:39
    then the burke method is a great way to
  • 00:05:41
    get started it's also a lot less risk
  • 00:05:43
    than some of the more complex stuff
  • 00:05:45
    which requires planning permission or
  • 00:05:47
    new build developments so hopefully that
  • 00:05:49
    was helpful i'll be covering more
  • 00:05:50
    property and finance related stuff in
  • 00:05:52
    future videos so stay tuned
Tags
  • property investment
  • BRRRR method
  • real estate
  • renovation
  • finance
  • buy to let
  • refinance
  • passive income
  • investment strategy
  • beginner guide