Property investors should generally always be looking towards strategies that maximise their returns. One way to do this is to combine a number of strategies that produce an outcome that is, hopefully, greater than the sum of the parts. The buy, refurb, rent, refinance strategy is an example of one such strategy. In this report we will look specifically at the finance aspect of this type of project.
First, for those who are not familiar with buy, refurb, rent and refinance (or BRRR as it is often known) a quick heads-up. BRRR generally offers the potential for enhanced returns compared to say a standalone refurbishment or buy to let project. There is potential to generate a short term capital gain as well as a long term one. There is potential to enhance yields and income. BRRR can also offer potential to leverage a relatively small capital investment to grow a portfolio quickly.
Looking more closely at each of the individual elements of BRRR now. When buying, although this strategy could potentially work with any kind of property, there are advantages to buying some kind of problematic or distressed property where value can be added. With refurbish there are often two aspects to the refurbish element: Refurbishment is used to not only make the property more lettable but also so that it can be financed using more cost effective finance. With a BRRR project the rental could be to a standard let but rental via a HMO is frequently considered as a way of maximising returns. With finance the overall objective is generally to finance on short term and relatively expensive bridging before refinancing to cheaper long term finance.
By definition, therefore, a successful BRRR investor needs to be multi-talented and multi-skilled. As well as a degree of market knowledge, property knowledge and project management skills, a degree of financial acumen is needed both when initially purchasing the property and subsequently financing and refinancing it.
CPC Finance is a finance broker and packager that specialises in sourcing and packaging a range of property funding.This includes buy to let and commercial properties, auction investments, property developments and secured loans. In this report we look more closely at the financial aspect of BRRR and take in some thoughts on the subject from Karl Griggs of CPC Finance.