How would you structure this to use as little of your own money as possible?
Property: 1 shop downstairs and 1 residential 2-bed flat upstairs
Single freehold title
Buying price £65k
How would you structure the offer to the vendor?
How would you add value?
What is the best way to finance it?
At what point would you put it on a mortgage?
The shared entrance could be problematic if the shop owner and the flat tenant are unconnected
Your ability to get a mortgage will be hampered by not having a tenant in the flat - commercial lenders, which are the only type of lenders that will look at this, base their mortgage on the current rent and the length of the lease. This puts you at a disadvantage on both counts. They will also downgrade the current value for both of these deficits also. So you want to defer getting a mortgage on it until you have maxed out the value.
Bridgers will lend on this type of property for the purchase, then you improve it by getting the flat tenanted and the commercial lease extended. Because commercial lenders value this type of property on a multiple of income and the quality/length of the commercial lease, you should now have a property value at closer to £100k. A commercial lender should give you a 75% LTV mortgage, which will leave you with not much of your own cash left in the deal.
What is the asking price? if it is higher than £65k, it is possible (if you know where to look) to find a market value bridger who will lend against the asking, rather than the purchase, price - this will reduce the amount of cash you need to put down a deposit.
You might not even need a deposit at all if you own a property with at least 50% equity in it, because we can use that equity instead of a hard cash deposit by getting the bridger to lend against your equity. This is cross-collateral bridging.
This is the sort of creative finance I teach on my Ninja Investor Programme.
Take a look at my YouTube channel, where I give lots of creative finance tips and mentee case studies.