Illustrative numbers, based on real projects. The buy price (56% of value), refurbishment cost (16% of value) and rent yield (6.2%) are averages from our 5 completed and in-progress projects. Price growth and loan terms are market assumptions. Results on a real deal will differ.
You would be investing in the British property market, a large and stable market with a long record of growth. Past performance is not a guarantee of future results.
Illustration: Central assumptions: 4% yearly price growth, 95% occupancy, 9-month projects and finished values as planned. Scenarios are illustrations, not forecasts, and not a best or worst case.
Here is what £250,000 could become after 5 years under each strategy. Tap a card to see how it works.
Bars compare each total. The thin line marks the money you started with.
How it works
BRRR
Short for Buy, Refurbish, Refinance, Rent. We buy a rundown property well below its market value, renovate it, and then borrow against the higher value. That loan returns most of your money, so you can do it again. The same capital ends up in several properties.
- 1
Buy
We buy a rundown property well below market value.
- 2
Refurbish
We renovate it so it is worth much more.
- 3
Refinance
A lender revalues it and lends you 75% of the new value. Most of your money comes back.
- 4
Rent
A tenant moves in and pays rent. You reuse your money on the next property.
Best for
People who want their money to buy as much as possible and accept a renovation step.
What could go wrong
- BorrowingHigh
- Reliance on valuationHigh
- RefurbishmentHigh
- Sale priceMedium
- Rental voidsHigh
- Hard to exit quicklyHigh
The renovation could cost more, or the new valuation could come in lower than planned. That leaves more of your money stuck in the deal.
How hands-on is it?
Hands-off for you. We run the renovation and refinance. Expect about 9 months per property.
Your numbers for £250,000
Properties owned
13
Your money is reused after each refinance. Built over several years.
Rent left each month
£1,720
After management fees and any loan interest. Quiet months with no tenant will reduce it.
Property you control
£1,950,000
What the properties are worth, in today's prices.
Your share after loans
£487,500
Property value minus £1,462,500 of loans. This is the part that is yours.
Cash not invested
£95,560
Money not needed for a full deal. It stays in your bank.
Total after 5 years
£1,060,427
4.24 times your starting money, before tax.
Illustrative annualised return
33.5%
The yearly rate implied by the modelled five-year result (£810,427 gain over 5 years), compounded. It is not an expected annual return.
Before income tax, corporation tax and capital gains tax. Tax treatment depends on your circumstances.
How the 5-year total adds up
- Property value after growth+£2,372,473
- Loans−£1,462,500
- Rent collected+£54,894
- Cash not invested+£95,560
- Estimated net worth£1,060,427
What your 5-year total is made of
- Property you own (after loans) £910k
- Rent earned £55k
- Cash left in the bank £96k
What it costs
Where the money goes: BRRR, per property
Every number below is for one property and updates with your assumptions. There are more costs here because we renovate and refinance. The refinance loan hands most of the money back, and what stays in is the last line of the up-front list.
Up-front costs
Purchase price
Bought below market value. That gap is where the profit comes from.
−£84,000
Stamp duty (SDLT)
Government tax on buying an additional home: 5% up to £250k, 10% from £250k to £925k, 15% above.
−£4,200
Legal fees
The solicitor who handles the purchase and checks the title.
−£1,500
AAI sourcing fee
2% of the purchase price. We find, check and negotiate the deal.
−£1,680
Refurbishment
The renovation that lifts the property to its finished value.
−£24,000
Bridging interest and holding costs
Interest on the short loan that funds the purchase, plus insurance, utilities and council tax while we build.
−£6,000
Refinance fee
2% of the new value, for arranging the long-term loan.
−£3,000
Total cost of the project
Everything above added up.
£124,380
Refinance loan paid out to you
A lender lends 75% of the finished value and the short bridging loan is repaid from it.
+£112,500
Money left in the deal
The part of your own cash that stays in this property after the refinance.
£11,880
Every month once let
Rent
6.2% a year on the property value, 95% occupied, paid monthly by the tenant.
+£736
Letting management fee
12% of the rent. We find tenants, collect rent and handle repairs.
−£88
Mortgage interest
Interest only, at 5.50% a year. You repay the loan itself when you sell or refinance.
−£516
Left for you each month
Before income tax. Months with no tenant will reduce it.
£132
How we calculate this: each property is bought at the stated value (BRRR and Flip below it), costs include stamp duty at additional-dwelling rates, legal fees, a 2% sourcing fee and a 12% rent management fee. Mortgages are interest-only at 75% of value. BRRR and Flip use a bridging loan of 70% of the purchase price until the refinance or sale, and each round takes 9 months. We start at most one new project a month. Leftover cash is assumed to sit idle. All figures are before income tax and capital gains tax.
This illustration does not show whether a lender would approve the borrowing: lenders apply their own affordability and rental-cover tests. Cash Buy and Mortgage are sized to use all of your capital, so real properties and prices will differ.
This is an illustration, not financial advice or a forecast. Property values can fall as well as rise, and returns are not guaranteed. Real deals vary. Speak to us before you invest.
Let's talk property.
Whether you want to invest in UK property, need to sell a place that needs work, or you're simply looking for a well-managed home to rent, we'd love to hear from you.
Get In Touch