BRRR Strategy

The first thing you need to do is find a property to purchase. This could be with an estate agent, online via Zoopla or Rightmove or even via auction.

If you don’t have enough cash to purchase the property outright, then you could consider using bridging finance. You can use a bridging loan towards the purchase cost, up to a maximum of 85% LTV.

It may even be possible to use bridging for 100% of the purchase cost, if you have additional properties to provide as security to the lender. This could be on a first or even second charge basis and may mean you don’t need to contribute any cash as a deposit.Click here to get started with a finance partner for your bridging requirements.

Note: You cannot use a standard Buy-To-Let Mortgage to purchase an uninhabitable property. If you wish to purchase using a mortgage, the property must be in a working order with a working kitchen and bathroom.

Once you have completed the property purchase, you need to get to work renovating it straight away. You can either use your own cash to complete the renovation or you can finance part of the works.

If you are adding substantial value to a property, you may be able to use finance to cover some of the refurbishment costs. The amount available is usually based on a maximum Loan To Gross Development Value (LTGDV).

Option 1: Fund up to 100% costs in arrears with a development finance product with bridging finance. This will give you access to additional funds for development purposes on top of the finance used for the purchase, with the same lender.

Option 2: Some funders will offer higher LTV funding upfront, where a refurbishment is taking place. This could be up to 85% LTV or more.

Now the property has undergone refurbishment for the purpose of rental or sale, you can now get a paying tenant in the property. Look online for a tenant in need or use your local or online estate agents. For avoidance of unpaid rent, ensure a guarantor is available for all tenancies.
If you are planning to keep the property as a long term investment, then tenants will provide a monthly cashflow, whilst the property value increases over time. Start the refinance process before a tenancy is agreed.
You don’t have to wait until a tenancy agreement is signed. Check the options and offers with a few lenders before committing, to ensure that you are getting the best product.

As soon as the work has been complete, the property can be refinanced to a Buy To Let Mortgage.

You can potentially secure a BTL mortgage for up to 80% loan to value of the new open market value. This will be subject to meeting the required criteria of the lender and also a surveyor carrying out a valuation.