Property investors need to use the F words frequently to get the results they want. And I’m not talking at swearing at the tradespeople who are getting behind with the refurb!
When you’re an inspired investor you operate with a cash buyer mind-set - and if you’ve heard me speaking anywhere you’ll be familiar with my take on this. It’s all about breaking out of traditional ‘mortgage-buyer’ thinking. You need a strategy to set you and your money free from being trapped in mortgage deposits so you can’t use it to buy more properties.
Track down a good deal - where the property is vacant and needs a refurb. An ideal property needs to be structurally sound, but is probably pretty run down otherwise and needs the bathroom and kitchen stripping out and replacing and a serious paint job throughout.
Time to get your persuasion skills out! Your mission is to talk the vendor into a delayed exchange. This means you put a nominal deposit down with an agreed date for completion - AND permission to go into the property PRIOR TO COMPLETION and do the refurb.
This won’t work with a traditional mortgage lender, but is a perfect strategy to use bridging for. Get your funds in place ready to go, This means that, while you won’t need the funds right away, you’ll have what you need fast to get the show on the road. As you won’t need the money until completion and, if you add enough value, you can probably cover that AND your refurb costs (or at least most of them) on completion.
The key to this strategy working is to get access to the property from the day of exchange. You will need to have your team lined up and ready to move fast to carry out the refurb - your aim is to get it finished BEFORE completion. Running over time will not be good news.
The refurb is finished - the completion date is here - now what? If you’re planning to sell on, you can put it on the market right away at its full market value. If you plan to hang on to the property as a rental you may want to look at specialist or commercial lenders who don’t invoke the ‘six-month rule’ - which isn’t actually a rule, just common practice. Best of all you can put a tenant in right away and start earning money from you property.
This strategy is great way to build up your cash reserves if you use it as a buy, refurb, sell, initially.