Back to all media

Buy, Refurbish, Refinance, Rent

Property News

BRRR is an investment strategy that sees investors buy property at hopefully lower than market value, refurbish the property, refinance it and finally, rent it out. It is a cyclical strategy where the process is repeated to build your portfolio: you recoup your deposit from the ‘refinance’ and use the funds towards your next purchase.

There are typically two strategies that can be used to fund the BRRR process: the rate chase or the leverage chase. Our property team explain.

Strategy One: The Rate Chase

What is the rate chase strategy?  

The rate chase provides a guaranteed exit with a refurbishment bridge that automatically transfers to a long-term investment mortgage. dual solution product: The investment mortgage is put in place once the refurbishment works are completed and a standard tenancy agreement is put in place.

This product is ideal for investors seeking the comfort of a guaranteed exit, coupled with competitive interest rates on both the bridge and the longer-term mortgage product. 

How much can I borrow?  

On average, the bridging facility will cover 65% of purchase price and the term mortgage will lend to a maximum of 75% of purchase price. This means the investor will have to fund the deposit and the cost of works. Also note, the automatic refinance is based on the original purchase price. Therefore, the investor is not able to immediately access any equity gained as a result of value increase. Any equity release would need to take place at the end of the fixed-term period.  

Strategy Two: The Leveraged Solution

What is the leverage solution?  

The leverage option allows the investor to use a different provider for the refurbishment bridge and the mortgage facility.  

The benefit of this is that the investor has access to a pool of lenders that will provide funds towards the purchase price and funds for the cost of works.  

How much can I borrow?  

The maximum loan offered is driven by a number of considerations. Typically, the refurbishment bridge will lend up to a maximum of 75% of purchase price.  

Investment mortgage products will lend to a maximum of 75% of market value, at the time of refinance. Adopting this financing strategy will allow you to refinance up to 75% of the uplifted market value (providing the refinance is after month 6), allowing the investor to release profits sooner than in the rate chase pathway.  

Rates for the initial bridging facility may be slightly more expensive, but this option can significantly reduce your equity input. This enables the investor to access deals that would not be attainable if chasing rate, or to undertake multiple projects at once.  

You may also be interested in:

Bridging Loan Applications on the Rise

Property News

See More

HMO Mortgage – what is it and how do you get one?

Property News

See More

Flexible Property Finance Facility

Property News

See More

Registered Address:
Pilot Fish Broker Limited, Allia Future Business Centre, London Road, Peterborough, PE2 8AN

Pilot Fish is the trading name of Pilot Fish Broker Limited.
Registered in England and Wales. No. 956 09 50

Pilot Fish Finance © 2024 All Rights Reserved

site powered by