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Starting your property investment the smart way

bridging finance Jan 15, 2017

THE QUESTION

I am pretty new to this, I have found a few BMV properties, one is a 3-bed semi property that will sell for maybe £65k, needs a full refurb, market value on the street is approximately £145k.  I don’t have much in the way of funds to put into this, what would the best option be?

THE ANSWER

The generic answer to your question would be delayed completion bridging, as long as the house was vacant.  This enables you to borrow against the £145k post refurb value, not the £65k purchase price to complete the purchase,

Here's how it works:

  1. Negotiate with the vendor to exchange contracts quickly, so they are reassured that it is sold.
  2. That negotiation should include getting the keys on exchange, not on completion as is normal, so you get access to the property.
  3. That negotiation must also include delaying the completion until the refurb is complete.
  4. Get agreement to lend from a bridger that will lend on the post refurb price, whilst ignoring the purchase price.

The bridger will lend 65% of the £145k post refurb value, that equals £94,250 less costs. Net result would be you borrow 100% of the purchase price to complete; plus you get the majority of your refurb costs back on day one!

This works great for deals where you don’t want to have masses of cash trapped in a deal, as your cash is released the day you complete on the property.

Investors that have completed my Recycle Your Cash workshop know exactly how to execute this strategy, as it is one of the modules taught.

 

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