When you’re building a property portfolio financing your investments is most often done by borrowing a large part of the purchase price, but if you have accumulated a pot of money or are fortunate to have a windfall, the question arises – do you use your cash to buy outright or still borrow to purchase?
Logically, if you can fund a deal with cash, you should; that way you have zero borrowing costs.
Investors are often reluctant to do this on the basis that tying up their cash in one deal takes them out of the game if another juicy deal comes along. However, as the saying goes ‘there is more than one way to skin a cat’. If you’re smart you can still grab that juicy deal, without having to refinance your current properties to release cash.
If you use bridging finance intelligently you can make that purchase without any hard cash at all. There are some key things that you need to know:
So the process goes like this:
If you then see another deal – property C – go back to the beginning of the process and repeat using the value in property C and, if required, property B to finance the purchase with bridging finance.
You can grow your portfolio much faster this way than anyone who is using the more traditional mortgage and save method.
Here is a video on my YouTube Channel discussing "How To Buy Cash Buyer Properties Without Cash"
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