For most people property deals require a substantial wad of cash to get into the game, but that isn’t always the case.

Typically a mortgage requires 25% down – and that’s before you start doing the refurb.  Then there are the properties that are basically sound, but aren’t in good enough condition to live in – and which no mortgage lender will even consider.

Properties that need a serious facelift are unmortgageable – but they also offer the investor an excellent deal.  Once the work is done they’re worth much, much more than the purchase price and the return on investment can be substantial – but without that essential cash they tend to be the preserve of cash buyers.

However, there are ways around this challenge – and they’re legal and are very profitable for the investor.

Two of my clients came to me for help with very different outcomes.

Not enough cash for a deposit and refurb

The first client –...

THE QUESTION

I have made an offer on a flat which has a short lease of 71 years.  I was told by the estate agent that it would only be £200 to buy a 100 year lease, because the current owner was looking at extending it.  I have been looking online and the cost seems to be more around £10,000 or so.

I have emailed the solicitor and asked the estate agent again, but no one is answering my questions.  It's so annoying, should my solicitor answer quicker or is this the norm?  I don't want to waste my time if the lease extension is too pricey.

I wanted to buy cash to mortgage later, which would also release most of the money I spend on it.  But if my money is stuck in one property when I could be buying more then it's not a good decision to buy.

THE ANSWER

71 years is mortgageable, but you are planning to buy in cash so that’s not an issue for you.  Once you extend the lease it is certainly mortgageable.

The sensible strategy here is clear:...

THE QUESTION

As a new property investor with an abundance of desire, I see my strategy will be to mortgage at 75% LTV on an interest only, refurb and leave little or no money in, then re-mortgage and live off the cash flow and capital growth.  What advantage would it be for me to buy property outright as a cash buyer using alternative financing, unless I found a few incredibly BMV unmortgageable properties?

THE ANSWER

How many properties is it your objective to own?

How many 25% deposits do you have the cash available to make?

For almost everyone, they have less cash than the number of properties that they aspire to own.  So the simple truth is that everyone will run out of cash for deposits before they acquire the amount of properties they desire.

This brings into play one vital aspect, the knowledge and ability to recycle your cash; the need to understand and be able to use the same pot of cash to buy property after property.

To an extent I can see that you have grasped...

When you launch your property career it’s rare to be cash-rich.  However, most investors own their own home – and frequently have substantial equity in their property.  So it’s obvious – remortgage your home, release a chunk of money and you’re off and running.  Or is it?

If you’ve got an unencumbered or low-geared (less than 25% LTV) property, you’ve got collateral.  But why incur mortgage payments and interest when you don’t need to?

Confused?  This isn’t as complicated as it might sound.

So if you decided to release equity to provide you with deposits for a few buy-to-let properties, you’ll have to make the application, wait for it to come through and then you’ve got a chunk of money sitting in your bank account.  It’s not earning anything there, but you’re already paying interest on the mortgage and your monthly income will have to cover the mortgage payments.

How many...

I’ve been in property for decades and I remember the days of no-money-down property purchases, but these are long gone.

You can’t get a 24-hour remortgage any longer.  Most property investors now see it as a longer haul as that 25% deposit means money is trapped in every property you buy.  The processes to get your money out fast and move on to the next purchase that made property a great way to generate an income have gone.

Does that mean that it’s no longer possible?

No – you just need different strategies – and I’ve been teaching investors these for several years.

Yes, it’s legal

There is NO element of mortgage fraud in my strategies.  At every stage there is full disclosure regarding the transaction to every lender involved.  Using creative finance it is possible to buy property, leaving very little of your own money in the deal.

Delayed completion

Using bridging finance with a clause that means works can be carried...

THE QUESTION

Why do some adverts say cash buyers only? I want to buy a property for £99K and have £27K but it says cash buyers only! It’s a gem too.

THE ANSWER

You should embrace 'cash buyer only' properties like your long lost rich uncle.  They are serious money makers.

Cash buyer only' properties represent a fabulous buying opportunity

1. That phrase puts off all mortgage-dependent buyers immediately, reducing your competition
2. The owners know they can only sell to cash buyers and cash buyers are going to do what cash buyers do the world over, for any and every commodity, hammer down the price.  So the owners are already prepared to take low offers.

Why pay £99K for it?  Stick in an outrageous offer for £69K.  On the basis that

• You don’t have to sell a property to buy this one
• You don’t need a mortgage
• You can exchange and complete in 28 days or less, if required
• You can provide proof of funds on request
• Your solicitor...

If you read my last blog post you’re probably wondering what those Ninja Investor Strategies I mentioned are:

• Strategy 1: 50% Below Market Value (BMV) strategy
• Strategy 2: 100% refurb strategy
• Strategy 3: 90% flip strategy

They’re all possible using bridging finance with the right lenders to turn you into an investor who can operate like a cash buyer.

Here’s a brief overview of each one:

50% Below Market Value (BMV) strategy

This is based on finding properties that are really cash-buyer only territory.  This is usually because the vendor either wants a quick sale for some reason or because they are considered unmortgageable by buy-to-let lenders.

When a mortgage-dependent investor finds a property that clearly can’t be mortgaged they walk away.  This leaves the field clear for the few investors that have the knowledge of how to buy this type of property.  Generally, these are cash buyers, but with the right strategy you can operate as a cash...

Most property investors start out using buy-to-let (BTL) mortgages to finance their property purchases.  The problem is that then your capital is trapped – at least for a while – and your ability to buy more properties is limited.  But not if you’re a Ninja Investor!

What’s a Ninja Investor?

Property investment is not just for people who have substantial cash reserves – anybody can become a successful property investor with a relatively small amount of available cash. 

Ninja Property Investors have developed a mind-set that isn’t limited to only buying properties through a mortgage.  With the right techniques they can buy any property that they’ve assessed as a profitable investment – whether it’s mortgageable or not. 

This speeds up their property portfolio growth – or profit generation because they know how to buy more property, faster, with less cash.

The secret is to think like a cash buyer...

THE QUESTION

For the last six months I've been trying to find the route into the property sector known as Serviced Accommodation.

The first problem was finding the right property that ticked my boxes, as well as being 'fit for purpose'. Having found the elusive house, I went in pursuit of the pennies to pay for it.

Most local lenders seemed totally unable to comprehend the concept of SA.  Did I mean Buy to Let? No; I’d have asked about BTL if that's what I meant.  Did I have the last 2 years accounts for the business? No.

But yesterday I got a breakthrough. Yes, my new broker friend could get me a mortgage for a SA purchase. The only problem is I have 'no experience' of managing an SA unit.

Is there a way around this?

THE ANSWER

Let’s put some perspective on the post.  Your frustration is both evident and understandable but, as the saying goes 'walk a mile in another man shoes' and what you have been told may not seem so baffling.  For anyone...

Most people who embark on property investment are not cash rich.  Usually they have successful careers or may have run a business and have built up substantial equity in their own home, but don’t have massive savings.

To get started in property newbie investors often decide to release some of the equity in their own property to put down deposits on others.  Property values are rising so the more properties you own, the more value you’ve got – and the price rises will go a long way to recovering the equity you’ve released.  It all makes sense.

Or does it?

If you have more than 75% equity in your property then you could remortgage and get a chunk of cash out ready to buy your next property.  Then you have to find that property – and that could take a while.  So the cash is in your bank doing nothing and you’re paying interest on a bigger mortgage.  Not so sensible, perhaps.

You could negotiate a loan against your...