How To Find BRRRR Property Deals?

Did you know you can by a house for free using the BRRRRR strategy?

Discover how to approach the BRRRRR strategy, why I re-invest my Rent-to-Rent income using this model and how to cashflow your property quickly...

In this episode, I will be breaking down the BRRRRR strategy, approaching this type of deal, and getting a house for free because that's the holy grail. If you manage to execute this strategy correctly, you will be able to go again and again and again. 

The majority of the money I make from my Rent-to-Rent portfolio I reinvest into cash-flowing assets through the BRRRRR strategy. I am making sure that my money is working for me, creating recurring income for today and the future. 

So, the whole idea of the BRRRRR model is that you Buy the property, Refurbish the property to add value, Rent out the property to provide monthly income and Refinance and take your money out of the deal. Then you Repeat and Recycle to go again and again and again. 

It's essential with this strategy that you have the proper knowledge before starting because if you get it wrong, your money will get locked into the deal, and you will be stuck! Buying property can be a slow process, and if you don't execute it correctly, you can hit a brick wall at one or two properties. 

Check out my YouTube video here, where I show you an example of how I used this strategy to get a £340,000 HMO for free. 

Listen to today's episode to discover five tips on effectively executing the BRRRRR model, a detailed breakdown of a case study and how to make sure your property will rent out quickly…. 

Available on iTunes, Google, Spotify and others or click “play” on the player below!

Podcast Transcript↓

I'm Simon. And a few years ago, I decided I wanted to make a change. I wanted to create a passive reoccurring income to support me and my family today. And a legacy for the future, a future fast forward two years, and I've managed to generate over 10,000 pounds worth of monthly passive income. I've set up the business, scaled the business, and now I've systemized the business to free up my time.

[00:00:33] So join me to find out how I've done it. How well does it doing it every day and how you can give it to.

[00:00:56] Simon here. Welcome to another episode of the podcast, where we talk all things, property, creative cashflow, and of course, how to be financially independent today, not in 25 years. And on today's episode, I'm going to be breaking down how to find BR AR AR AR AR AR. Deals. How do you do that? How you get a house for free, because that's the holy grail.

[00:01:29] And if you manage to execute this strategy correctly, you will be able to go again and again and again, and build up not only your cashflow for today. I rent to rent, but also your legacy cashflow for tomorrow. So that's what I do. I use my renter and income to fund my lifestyle. Um, but the majority of the money I reinvest in cashflow in assets so that my money makes money before I spend the money and a quick one on there, there's going to be huge.

[00:02:10] Temptations and pressures. Now things start to open up for you to start spending some of this money that you might have been able to save joining lockdown and just a word of warning. Just be careful, you know, be careful if you've managed to save money, make sure you're investing in yourself and in your future, rather than blowing that money, you want to get that, you know, you want to get that money making more money.

[00:02:36] Get that money working for you so that it creates recurring income. And that's what I'm doing. It's tempting as it is to start going crazy. Um, I'm going to reinvest as much as I can just to make sure that the money makes its own money. So, so brr, the whole idea of this is you buy the property. Okay. You refurb the property to add value.

[00:03:02] You rent the property out to prove the income. You refinanced a pull your money out and then you repeat and recycle and go again and again and again, but the reason it's important to know this stuff is if you get it wrong, your money will get locked into one of these deals and you will be stuck. You'll be stuck.

[00:03:26] That's the thing with buying property is a slow process. So you need to make sure that you execute it correctly. Otherwise, you'll get stuck and you'll end up with one or two properties and that will be your luck. So today I'm going to share with you five hacks on how to do this. And I've got an amazing video on YouTube about how I did this to get a 340,000 pound HMO for free.

[00:03:52] So I'll put a link in the description to that video, or just jump on YouTube search at Simon Smith online free engine for EK hate Shemot and it will. Hopefully come up for you. So into the five hacks, number one, and this is key when you're looking for these purchases, you need to make sure that there's a spread.

[00:04:13] And I personally like to focus on bricks and mortar. Don't worry about commercial valuations and all that. Right now, I would focus on the bricks and mortar. And you want to know what the cheapest property on the road is or what it's sold for. And what the most expensive property on the road is. And you can probably look around a quarter of a mile outside if they're direct comparables, you know, if the houses look the same, then you can also use those.

[00:04:46] And the way you do that is let's say, for example, you found a potential deal, jump on Google search, right? Move houses sold, put in the postcode, maybe put it, you know, set it for the last two years and look. Three bed. Okay. Right. That one sold for 100, that one sold for 80, right. This one sold for 145 grand.

[00:05:09] What did that have click on the ad thing. It's actually quite similar. So that means, you know, there's a spread. The cheapest is for 80. The most expensive is for warm four or five. So if you can pick something up on that road or in that area for closer to 80. And do a refurb. You can refinance it at one, four five.

[00:05:30] If you've not got the spread, forget about it. It's not going to be a BR or because there will be a ceiling limit to the values on a particular road. And when the value of it comes out, they're going to look at comparables and let's say, for example, you're buying it at one 30. The highest comparable is one, four, five.

[00:05:52] You spend 15 grand on it. You're going to have all your money locked in that deal. So you need to make sure there's a spread. And if you are operating in the same area, which I recommend after a while, you'll know the spread and not only will, you know it, but you will have evidence of when you've used that spread.

[00:06:11] For example, we've got a property, we purchased it two 20, we refinanced it free 40. Now, when I'm looking at similar properties, I can use that as a benchmark and say, Hey, Mr. Valuer, This is what you valued this property at, which is why this one should be worth this. And then it becomes rarely quite easy because you're not guessing the first time you do this stuff in an area, you're going to be not guessing, but making a calculated judgment, which could be wrong.

[00:06:44] It might not come to fruition. You do get a lot of down valuations. So first things first, make sure there's a spread. No spread no deal. Karen and looking, second thing is you need to negotiate a discount. You make all your money in property when you buy, not when you sell. So make sure that you are getting it at a discount.

[00:07:10] So with the previous example, highest property on the street, one, four, five lowest property on the street, 80. Okay. You want to be getting as close to 80 as possible? So if the property is on the market for a hundred grand, you might be able to get it for 85. Great. But don't try and get all your discount in the form of cheeky offers and low offers.

[00:07:35] Because if you do that, by the way, you will get blacklisted from agents. They will get annoyed, you're annoyed vendors as well. So you want to be also prepared to add the value, which is when the refurb comes in. That's why you buy a discount and you refurb to add even more value. And that's how we can get up to 40 to 50% off in terms of value wise off a property price.

[00:08:04] So, you know, don't try and get the property, um, too ridiculously low. Make sure it's in line with you get in maybe 10, 15, 20% discount off the price. And then you're going to add another 15, 20, 25% value through the refurb, which allows you to get some chunky 40, 50% below market value deals. They do exist, but you need to make sure that you're using both the refurb and a genuine discount, not just relying on the discount.

[00:08:40] Number three, you need to look at the rental demand. Of course. So it's all right. The property being at a huge discount and you being able to see a spread, but if the property is not going to rent or if it's in a really, really, really bad area, and he's just going to give you headaches, then. You know, you want to make sure it's in a desirable area or it's in your chosen area for your chosen tenant.

[00:09:04] So make sure that you do some research on your area. I personally love investing in areas. I know. Um, if you, I don't know the area, speak with other investors and speak with sources, deal sources that might be able to help you with that. Okay. You need to know the rental demand. You need to know the spread.

[00:09:26] And somebody with more experience will allow you to make a better decision from day one. Number four is plan the exit. So what I do you on my BR or deal calculator is I run the figures based on, on an expected Reval top-end Reval and also a down valuation. So that I know either way, how much money I'm going to have locked in.

[00:09:56] And I want to make sure that I can afford to have the amount locked in if we do get that down valuation. So plan your exit. So this fringe and 40 K HMO, for example, it was on the market for two 50, I saw there was a spread, there was properties available for 300 free, 20 some somewhat sold for free 50K.

[00:10:18] So I knew there was a spread. I knew there was a spread already. I knew I was going to do a reefer to add value. And then on top of that, I managed to pull it down from two 50 down to two 20, said it was a three pronged attack there. And that's what you want to ideally do because when you buy an assets at that price, you, you, I say you can't go wrong, but I mean, you're going to struggle to go wrong because you brought them with so much window.

[00:10:47] So much value that you're going to have equity in the property, but you must plan for the best and the worst case scenario and last but not least BR Oz purchases are going to be heavily reliant on you. Staying the course I've sometimes watch properties on the market. Go down, come off the market, come back on, come off the market, come back on for six, seven, eight months.

[00:11:15] Before purchasing, I've watched them. So you need to be patient and stay the course. Um, and anytime you see a property, I would recommend doing a video, doing a video, crunching the figures, making a little note in a spreadsheet or in a folder so that if you do see the property comeback on the market or something, you can just look at your video, call up the agent and you can say, Hey, you know, what's going on with that property?

[00:11:43] Why did it fall out a bed? Could I get involved and that is one of the best ways to get these properties are low price. I'm looking at a few right now. Remember one in every three property purchases, fall out of bed. So make sure that you follow up. So they're five hacks. Let me know if you find this content useful, drop me a review.

[00:12:08] Um, really helps boost the algorithm. Shared a podcast, hit me up on Instagram at Simon Smith online. And let me know how you find it or what you would like me to cover. And of course, just remember this one thing. Yeah. The best time to be in property. Was 10 years ago, 20 years ago, 30 years ago. The second best time is today.

[00:12:33] So don't wait 25 years.

[00:12:48] Thanks for listening. For more information, check out Simon Smith, online.com. See you next time.