How To Use BRR (Buy, Refurbish, Refinance) Property Investment Spreadsheet

how to use a buy refurbished refinance spreadsheet the fear of losing money is the number one factor that stops people getting into property discover right now how to stay on the right side of the figures and invest my name is ryan from luke holmes academy teaching property entrepreneurs just like yourself how to invest in property fast firstly let's understand brr and how it works so for me this strategy one the biggest part of my portfolio and we're doing a day in day out we're out there viewing all the time and it's a hugely powerful strategy for building net wealth now in brief brr stands for buy refurbish refinance rent so what we're going to do we're going to buy a property below market value you know so typically we're looking for 15 to 25 below market value if we don't get the property below market value the money gets stuck so this is one of the key things that we have to be doing and this is why we analyze the deals on the spreadsheet this is why we have to know uh what the numbers are and how they all play out it's vitally important that you know how to do your diligence on these type of deals because if you don't and you get it wrong it could be the end of your property journey right there the refurbished side of it is obviously the um added value that we're gonna add so we have to be able to add value to the property to be able to get the uplift on the mortgage so you know if we're buying a property at 50 grand then we spend 10 grand on it it might be worth 85 then great we're going to get we're going to prove that we've added that value on and we're going to get that uplift don't get me wrong you can just buy you know quite well done out properties at below market value you know maybe someone uh you know getting divorced or there's an emergency cropped up maybe they're moving abroad and they just need to get out that property um you might be able to pick it up and it might be in a good condition so um but typically most of stuff that i buy we need refurbs that's the stuff we're looking for that's the stuff that gets below market value acceptances you know it's quite difficult most people will pay market value for a donut property and so most donut properties will get market value so these are the type of properties you do need to be going for and that you will um eventually pick up add them to your portfolio and run this strategy so we've got by we've got refurbished and then we've got the refinance part of it so we're gonna refinance it once the once the refurbishment's done and then ultimately we're gonna rent that property out and start getting it to cash flow now the quickest the quicker we can do all this uh the better for us it means we can acquire more assets on our books and ultimately it means we can get more rent into our bank account each month you know because most of stuff that we're doing this for most time we're doing this for is for cash flow we want more and more monthly cash flow every single month so the quicker we can get these projects done the better now let's just take a quick look at exactly how the numbers would play out on these type of deals so i'm going to just use it in in simple terms say there was a property worth a hundred thousand pounds now that's done up market value you know so the market value property is a hundred thousand pounds now we want to be buying a property say 70 000 pounds obviously that's 30 below market value now these deals do exist okay they do exist but i'm just gonna explain the numbers in in layman's terms here so we fully understand how the strategy works and then we're going to jump over on to the deal analyzer that i've got set up and i'm going to show you why it's really important to have a spreadsheet that crunches these numbers out not only to save time but to make sure you stay totally non-emotional from these investment investments and that it's totally about the numbers the minute you start getting emotional in investments the minute you start trying to tweak the figures to make them work is the minute that your property journey starts to grow into a halt so we might have a ten thousand pound refurb on this and therefore it's 20 below market value that we've then uh acquired that property for so we've got the 70 plus the 10. now you probably have you know including stamp and stuff and solicitors fees let's assume you've got another three and a half grand worth of fees which then knocks this down to about 16 and a half to 17 below market value now once it's refurbished what we're then going to do is we're going to get a a mortgage on the 100 000 pounds now the hundred thousand pounds mortgage at 75 percent loan to value which most lenders are putting out these days is 75 000 pounds we pay off the original borrowing which was 70 000 pounds and you can see there we've probably spent 13 and a half thousand pounds on top of that so in total we're gonna have seven and a half thousand pounds stuck in that deal which isn't a bad deal you know if we're gonna get three four hundred pounds worth of rent out of it each month that means in less than two years we're going to have all the money back out of those deals now everyone's striving for the full money out deals or the cash back deals but in my experience they're very hard to come by they do happen you know they do happen but you've got to accept that you will leave some money in quite a few of your deals but it's all about leaving the minimum amount of money in as possible to be able to then move forward on your next deal you know if you've got a pot of money you want to be able to then put it in the next property put it in the next property ultimately it's going to drip down slightly as as you keep leaving bits and bobs in but then it gets topped up by the rent you know the rent is going to keep pushing it back up and up and up so you know it's it's hugely important that you invest in the numbers it really really is so what i want to do now is i'm going to just switch onto my my laptop here and i'm just going to show you how i use my deal analyzer how i use a complex spreadsheet pump some numbers into it and it then ultimately spits out whether it's a good buy or a bad buy and whether we should be investing or not so let's dive over to the computer okay so here we are this is my deal analyzer as i call it um it's quite complex spreadsheet as you can see but it'll all it simplifies a lot for me it's been built over the years but it's served me very very well so let's just take a dive in i'll just zoom in here so we can kind of see what's going on um so in essence this also works as a bit of a crm system or a follow-up tool so you know by putting in all the the details of the agents and the properties and postcodes what it was advertised for and the website links we can always go back to these deals because not every deal is going to come off the first time around so we do have to be going back to these estate agents going back to vendors and going back to landlords if it's rental deals um just to make these get to get the follow-up uh keep the pipeline full and just keep checking in you know one in three property deals falls through so just you don't get it doesn't mean that you might not ever buy it so in brief what we do is i just fill in the gray columns so we'll just kind of use the example that we kind of have on the whiteboard there so we've got 70 grand purchase price you can see that automatically put the stamp duty in we'll go 1000 legal fees i think we had a ten thousand pound refurb cost i've got no sourcing fee broker fee 145. um this is going to fund it through a mortgage but there's also the option here to fund it through bridgette with a bridging calculator that i've all set up there and so as you can see it starts spitting the figures out but just to keep things simple uh whether your funding is bridging or you know let's let's just put this 30 deposit which is a typical bridge and loan deposit so you would need 21 000 pounds and deposit and then you'd bridge the forty nine thousand pounds they're obviously arrangement fees etcetera and a bridging loan you would pay with more than that and you'd also have a bit more uh legal fees as you typically have to pay for the bridge and launch legal fees but again we're just keeping this symbol here uh rent uh let's assume it was 500 pounds a month rent and i personally don't use letting agents i've got my own in-house legends team um but if you were let's just say that we're going to charge you 10 the rent each month and then let's say your insurance was 15 pounds a month so 289 is going to be how much you're going to have in this property each month new market value we said was 100 000 pounds done up so you can start seeing it starts to populate the figures and as you can see here it's now giving us a discount including all the fees it's 16 so ideally we're looking for 15 to 25 or more but um you know it'll tell you whether the deal will play out so it also has a flip viable you calculate if you just want to flip that nail straight on and tell you exactly what what's what what you can do there and then it's got the total investment cost your monthly cash flow and this is if we weren't going to refinance of what your yields would be now if you are going to refinance obviously a few more costs involved so we've got a total investment cost now let's see here for me these two these two are rosa of red now i'm looking for two greens here so basically what's wrong here is that um it's going to take me more than 36 months to get my cash flow out um which is my golden rule and it's refinancing monthly cash flow is less than 250 pounds a month so for the sake of keeping the calculator going i'm just going to bump this up slightly and show you uh i'm also going to get rid of the latency um because i don't use them so uh you you know you'll start to see there we've now achieved the 250 pounds or more per month from the property so that's gone green and this should have gone green but it's gone clear but all in all it's not red and you can see because now it's below the 38 months 36 month mark so cash out from refinancing so we're going to invest 37 750 we're going to get 26 grand back out and the stress test monthly payment is 4.98 so that's going to make sure that keeps you on the right side of the mortgage lenders make sure that you will get a mortgage on this property and it's quite easy to forget those things you know stress test payments so money left in the nail nine and a half grand a bit more than i would like in all honesty i like to leave no more than probably six or seven in most of our deals but nine and a half grand i'm going to get the money back in 28 months and the return on investment's 11 so you know all in all not the worst day in the world not the best day in the world but something worth investing in and that's how i quickly analyze the deal to see if those two lights go green i'll buy the deal you know and as long as the due diligence is being done to make sure that the refurb cost is spot on and it's going to be you know no more than 10 grand and to make sure that we've got the rent right and make sure that we've got the uplifted this column here is the most important color you can fudge this as much as you want you know i could set that at 110 000. i could find a figure on right move that stated to 110 and all of a sudden i'm like what a deal that's going to be 2 grand left in but the reality is you know your data's this sheet is only as good as the figures that you put in i like to be realistic i i actually more than likely go under the market so i would probably if that was genuinely showing 100 000 pounds on comparables i'd want to run the numbers at 95 and just see exactly where we came out and then i'll base my offer based on that so i might have to pop my offer down get us back in the ballpark and get us back into the green lights so very simple system uh you know we can add in the research here so it gives us the average of all the um all the various guides there and you know as i said if you want your bridging calculators there as well i've also got lease options set up on here so we can do lease options and then it also runs it in terms of an essay analysis uh shows us exactly what what the profit would be so we can then filter the exit strategy through and have a look at you know how much we're going to rent it for what the seasonal trends are going to be et cetera et cetera it was a hmo the same and then ultimately we have you know comparables dashboard which shows us the most profit but brr is what we're talking about today and this is how i calculate my brrs this is my spreadsheet that i use um you um you know you you need a spreadsheet you know whether it's just to to help you follow up and keep track of everything but also to remove the emotion and make sure you're on the right side of the numbers you know make sure once you've set this up it's there i've had this for many years now i've tweaked it along the way don't get me wrong but you know it serves me very well it serves all my staff well my source as well um you know and all the mentees using this you know find it absolutely um game changing because it just it's quick and easy you can see there analyze the deal in less than a couple of minutes and the numbers are going to tell us whether we should invest on our invest or ultimately what offer we need to tweak it to to make it work for us so that's how it works um that's how brr works it's a hugely powerful strategy i absolutely love it it's been a game changer for me it's added a lot of net wealth to my um my portfolio and we continue to push it hard and there's many ways to fund the deals you don't always have to be using bridging or mortgages you can be using cash finance jv you know financing investors there's many ways to fund the deals but ultimately as long as you've got a good deal and it doesn't get much money sucked in then you you know most people will pass that deal if they're going to get a good return out of it so they can see that the numbers are going to play out so as always if you want to continue uh with my journey don't forget to subscribe i'm pumping out information try and get a video out there every day but if you want to take things to the next level if you want to get access to things like this deal analyzer if you want to you know accelerate your results and join the mentor program it's a three-month crash course um you know we we go through absolutely everything and i guarantee you will get deals i guarantee you'll change your financial position by being on that program head over to nextlevelpropertyinvesting.com and put the call with me we can have a quick chat and make sure that we're a good fit for each other before you get started take care everyone

Channel: Ryan Luke

Views: 3,245

Keywords: property, coach, serviced accommodation, investing, hmo, landlord, landlady, training, learning, investor, profit, cash flow

Id: _hcyob4Ghqo

Length: 13min 30sec (810 seconds)

Published: Thu Jul 23 2020