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How to Get 100% of the Purchase Price

ninja learning Nov 20, 2020

THE QUESTION

Is it possible to finance a well below market value property with 100% of the purchase price via bridging - and then refinance the next day to a BTL mortgage? Doing this would you get a true valuation of the correct value when you refinance and not the BMV purchase price?

THE ANSWER

The chances of you borrowing 100% of the purchase price are remote.  The only ways you might be able to do this are:

  • To pick the property up 30%+ below the asking price
  • Put up a property you own already with little or no mortgage on it as additional security.

There are a few bridgers who will lend on value rather than purchase price and this will reduce, rather than eliminate, the need for a deposit.

For refinance, you won’t get it mortgaged on day one, but you can get it remortgaged within 6 months by using the right mortgage lenders.  However, be prepared to pay more than leading market rates for this.

There is only one way to get it valued above purchase price paid - do...

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3 Strategies to Build Your Property Investment Cash Pot

ninja learning Nov 05, 2020

The biggest challenge for property investors is cash flow.  First you have to have a chunk of cash to get started - and then your cash is trapped in the property you purchase.

If you have aspirations to become a buy-to-let (BTL) landlord, then you need to find a way to build your portfolio - without it taking years.  That’s the route to quitting your day job and being able to live comfortably off your property investments.

Here are three ways to invest make quick profits and get your money out fast.

1: Flip

This means you buy a property and sell it at a profit as quickly as possible.  Why isn’t everyone doing this?  Because some people see it as too risky - but with the right finance strategy, it’s not as risky as they think.

You may refurb a property to improve its value - but some people don’t even do that.  If you can find good bargains at auction it’s actually not that difficult to resell properties at a higher price, even...

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What is a sophisticated investor?

ninja learning Oct 05, 2020

It’s not someone who wears designer suits and likes fine wines!  If you’re getting into the property market it can be tempting to get someone with money to invest in your property purchase, to help to get your portfolio moving.  But any joint venture (JV) partner who is investing cash MUST qualify as a sophisticated investor - according to the FCA.

This is also known as Directive PS13/3.

It covers a range of categories of investment - and includes property deals.  So, before you consider getting into a JV, you need to be sure that your potential investor qualifies as a sophisticated investor or falls into one of the excluded categories.

What is an Unregulated Collective Investment?

Any financial deal that offers a split of the profits and, by definition, a split of the losses; and you cannot guarantee that your project will make a profit.

The FCA’s viewpoint is that an unsophisticated investor can’t do an accurate analysis of what is - or is...

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The ‘F’ words

ninja learning Aug 05, 2020

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.

That’s where the ‘F’ words come into play.  There are 5 of them and they stand for:

FIND

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.

FINESSE

...

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How to get your offers accepted

ninja learning Jan 20, 2020

THE QUESTION

We’ve been searching for a property to flip for several months, consistently doing viewings and putting in offers.  But, our offers are always rejected.

We’ve done our due diligence so know what our maximum is to make a decent profit.  We follow up properties that we’ve offered on and have broadened our area with no luck.

How do we get vendors to accept our offers? We viewed over 50 and made offers on many without having any of them accepted by the vendor.  Any help/advice is gratefully received.

THE ANSWER

You are doing nothing wrong and plenty right, but an understanding of human behaviour will enable you to get a better perspective.   It’s human nature to over-value what you own already and under-value what you seek to own.

Whilst your calculation of what you need to pay for a property is probably accurate, it is not matching seller’s expectation of the sale price that they can achieve.

If your offers were being...

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100% Refurb - a Ninja Strategy

ninja learning Jul 30, 2019

This is the Cash Buyer Mind-set at work – and it’s a technique very few investors use.   Most of them wouldn’t even consider this kind of negotiation – leaving the field free for the Ninja Investors who have the knowledge and know when and how to use it.

This Ninja strategy lets you buy properties with a minimal deposit and leaves your cash free for refurb, simply by delaying completion.  

Delayed completion bridging is also referred to as ‘Exchange, with delayed completion’ (EDC).  The objective is to have no money left in on the day you complete – or at least a lot less than the 25% deposit plus your refurb money.

Here’s the strategy in a nutshell:

  • Find a vacant property that needs a refurb
  • Exchange quickly
  • Get the keys on exchange and permission to enter the property to carry out work
  • Do the required refurb between exchange and completion
  • Get the lender to lend on the post-refurb value, rather than the purchase...
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Do you really need a 25% deposit?

ninja learning Jun 10, 2019

Most mortgage lenders require a 25% deposit, based on the amount you’re paying for your property.  If you’re planning to get into property that can be a big hurdle to get over.

The days of no-money-down mortgages are long gone and are unlikely to return.  Leveraging credit cards is a decidedly dodgy way to raise funds, so where does that leave you?

There’s a strategy I call the 90% flip.

This strategy blows apart the preconception that a 25% deposit is required to buy an investment property.  Better still it works in a variety of situations. 

  • It works great for smartly presented houses where no refurb is required, but the owners are motivated to sell.
  • It also works if you want to buy a repossession.
  • It also works if you want to buy at auction.
  • Interestingly, it works if you want to sell at auction too.
  • Lastly it will work if the vendor won’t go for the 100% refurb strategy covered in the next section.

This strategy can turn around a...

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The Calculator Close

ninja learning Mar 20, 2019

When you’re negotiating with the seller of a property you are interested in, don’t forget to prepare properly.  That means being ready with your persuasion strategies. One of these is the Calculator Close. This is how it works.

Rule 1:   You must give control of the calculator to the other party.

Rule 2:   Any figure punched into the calculator must come from them, never from you.

Start with the asking price – get them to enter this in the calculator. Then break down all the costs involved in getting it to the ceiling price, one by one, including:

  • The cost of the needed refurb; you’ll add credibility by breaking down the cost into separate component parts, materials and tradesmen or room by room.
  • Any buying and selling/refinancing costs (including Stamp duty land tax)
  • Maybe borrowing costs
  • Definitely the profit you need to make from the project to make it worthwhile taking on.

Don’t allow them to use ‘bargain basement’...

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Get better deals

ninja learning Feb 20, 2019

When you’re trying to negotiate with vendors to bring down the price of your property, you need some smart strategies to reduce the price (and increase your profits).  The Calculator Close is one of these strategies, this is how it works:

The Calculator Close

  • Rule 1: You must give control of the calculator to the other party.
  • Rule 2: Any figure punched into the calculator must come from them, never from you.

Start with the asking price – get them to enter this in the calculator.  Then break down all the costs involved in getting it to the ceiling price, one by one, including:

  • The cost of the needed refurb; you’ll add credibility by breaking down the cost into separate component parts, materials and tradesmen or room by room.
  • Any buying and selling/refinancing costs (including Stamp duty land tax)
  • Maybe borrowing costs
  • Definitely the profit you need to make from the project to make it worthwhile taking on.

Don’t allow them to use ‘bargain...

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Delayed completion for faster profits

ninja learning Dec 10, 2018

THE QUESTION

I am looking for some inspiration on a potential property.  It is a lovely property that is presently mixed use as a business and flats.

It can be converted to five flats that will fetch a premium price due to the location. The person selling is prepared to listen to options and is prepared to let us develop out the property while she still owns it, therefore, minimal cost to us at purchase.

 I have a few ideas myself but am looking for a bit of inspired creativity.

THE ANSWER

One creative solution was suggested by one of my students who recognised that this opportunity fits one of the strategies I teach on my Ninja Investor Programme workshops.

Through our brokerage, we have financed a number of projects funded exactly this way. So this is not just theory, it works and works well when the number are right.

If you have the current owner’s agreement and permission to enter the property and do the required works to do the conversion, then the delayed...

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