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Leveraging your investment by going Limited


Can you buy a property for cash, using other people’s funds loaned to your Limited Company, carry out a refurbishment and then remortgage on to a BTL, hopefully releasing some equity to pay back the investors their initial stake in addition to their margin of interest?

Following the remortgage the property will be solely owned by your own Limited Company and the initial investors will have no vested interest.

Will the mortgage company insist that all of the funds are from a personal source, i.e. not outside investors/JV partners?

I'm exploring ways to accelerate portfolio building and seem to keep hitting stumbling blocks.  The buy-refurbish-refinance model seems to be getting quite hard to implement, so I was looking at ways of buying un-mortgageable properties with cash and then financing them to current value thus avoiding ERCs and other fees. I'm not currently investing, but really hoping to start this year.

I have quite a lot of business experience, time, some access to funds and extensive construction experience. I just don't want to build a portfolio at a rate of one property every three years


The concept you refer to is that of recycling your cash and I teach this on my workshop the Ninja Investor Programme.

The two factors that are required to make this type of deal work are:

  1. Buy below true current market value
  2. Add sufficient value by improving the property i.e. refurb, conversion, extending etc.

You don’t necessarily need both in every case, but at least one will need to be present to make it a viable deal e.g. if you can add sufficient value it may still work paying full market value to buy it.

The principle you outline is just fine and certainly achievable.  The caveat is whether you can uplift the value sufficiently to enable you to borrow enough when you refinance onto a mortgage to repay the money you borrowed.  Using some of your own cash would decrease the risk of not being able to raise enough to repay who you borrowed from.

Mortgage lenders (unless they are commercial mortgage lenders) are very strict on using your own money when you are buying a property.  However, for a property that you already own, having bought it previously, lenders are rarely as interested where the money came from to buy it.

The issue you’ll struggle to get past is that standard 'vanilla' BTL lenders are pedantic about you using your own cash as a deposit don’t lend to limited companies anyway; so you are already limited to specialist or commercial lenders.

In part, I teach an alternative to using other private investor’s funds (as they are often flaky and unreliable), instead I recommend bridging lenders to provide the funds.

The focus on buying unmortgageable (at that point in time) properties is highly relevant.  Buying at a discount when you are a cash buyer is a universal experience that transcends purely property.  I teach that there are two huge reasons why you should focus on unmortgageable properties

  1. At a stroke all the mortgage-dependent investors that could possibly compete with you to buy it are out of the game on this property, due to the fact that it is unmortgageable
  2. The sellers will be aware that they own an unmortgageable property and know that the only people who can buy it from them are cash buyers – and they know cash buyers will do what cash buyers do, hit them on the price. This means that they are already conditioned to accept below asking price offers before you have even viewed the property.

Your construction background makes buying this type of property even more do-able.

For any mortgageable property it is vital to ask yourself four questions to determine if it stacks up as a deal:

  1. What, precisely, makes the property unmortgageable?
  2. Can you solve the problem and thus make it mortgageable?
  3. How much will it cost to solve the problem?
  4. How much value will you add by solving the problem?

Money laundering is not an issue as the funds provided to you will have an audit trail. Your limited company will pay Corporation Tax on its profits so there will be no issues there, either.


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