Is this possible:
Question is, does this work? Can I use BTL mortgages for this or do I have to use bridging finance? Can I refinance BTL mortgages in this price range? Will there be limits to what I will be able to pull out of the re-mortgage bit. (This is all assuming I take zero out of the company)
Your intention is sound, but your strategy to achieve it is a bit off beam. I know something about this, because I have been teaching investors how to achieve exactly this outcome, and a lot more, since 2013. Here is how to refine it to make it more achievable.
If you’re thinking of buying at auction, bidding is the least of your worries. Before you set foot in the auction room you must have done your homework.
Check out the auctioneer’s catalogue and don’t go in blind. Check the properties you’re interested in. Find out as much as you can about them:
Then you need to get your calculator out and work out the maximum price you can realistically pay for this property, to ensure you have profit built in after any work that needs doing.
You’ll also need to calculate how long any refurb is likely to take and KNOW (not guess) how much it will cost to do it and how long will that take. If you’re experienced in refurbs and...
I have a restaurant business, which is a limited company. A couple of our sites are in places where finding staff can be tough, so offering live-in accommodation could really help us. I’d like to buy a property to use as staff accommodation, what kind of mortgages are available and how much will I need for a deposit?
Staff accommodation seems to be a sensible solution to restaurants in remote places. There is a prestigious restaurant on the Isle of Skye that does exactly that; and staff accommodation is an attractive perk in the hospitality industry.
Buying a significant asset (especially property) in the name of a trading business leaves the asset available for any potential future creditors of the business to go after.
The smarter options would be to buy in your personal name or set up a new limited company for owning property. Deciding which is the smarter of the two is, essentially, a tax question because you will be...
There is one thing that can seriously dent the profit in any project and that’s overpaying for the property. An essential part of your due diligence is to work out the maximum you can afford to offer on any property, while still giving you the profit margin you need.
It’s easier to work backwards when doing this.
Start with the end value that your property will be worth once you’ve completed any work that you propose to do to it. You should be able to find comparable values of similar properties that have sold within the last few months.
The majority of properties that investors buy are flats, terraced and semi-detached houses. They don’t tend to buy large detached properties in five acres of ground, this means that comparable values are much easier to obtain for these types of property.
If you are buying a commercial property this may not be so easy and you may need to engage a commercial surveyor to get a true current and future value.
Most investors think that the only way to finance deals, when their bank account hasn’t got enough in it, is to joint venture (JV). To maximise your return on investment there is a JV Pro-Fit Retainer strategy.
Stop giving away 50% of your deal’s profits when you joint venture and, if you do decide to set up a joint venture stay on the right side of the FCA.
The key thing to remember is that the Financial Conduct Authority (FCA) states that you must only joint venture with someone who is categorised as a sophisticated investor. That means you need to know about PS13/3 and what constitutes a sophisticated investor and there are seven main criteria for these.
Property investment can be a lonely career as so many people – who are not in it and don’t know much about it – consider it to be a mug’s game, risky and not a ‘proper job’.
I think it’s a bit like Twitter (which is also a network), people either ‘get it’ or they don’t. I know lots of people who think Twitter is an ideal way to make contacts – and I know quite a few who think it’s a massive waste of time! My social media expert friends tell me it’s an exercise in joining up the dots – it’s not who you know, it’s who they know.
I speak at many property networking events and they are generally well-attended, and I know there are a huge number of property investors who don’t go to networking meets.
Attending your local BNI or other business network probably isn’t going to be a huge help to you as a property investor. You’ll...
Are you looking out for unmortgageable properties with problems that you can solve? They’re lucrative investments if you know how to leverage them – and with smart financing, using bridging they are great opportunities.
These are all great for intelligent investors, but mortgage lenders won’t touch them.
I’ve just been offered an HMO in need of some work. There's about £20k in the deal, and it could be flipped or end up as NMLI (no money left in), but it's a Wimpey no-fines house, i.e. poured concrete construction. I have heard that Birmingham Midshires lend on these, but considering an exit strategy (immediate or in future) is it wise to go down this route?
If a flip, will buyers be put off by the fact there's only one potential lender. If buy to hold, is it possible that the one available lender could re-assess their exposure and pull that product, making it a cash only deal – and wiping the profit out of the deal?
I see this regularly – non-standard construction properties where the reduction in price comparable to similar standard construction properties attracts investors like moths to a flame.
These are mostly properties built for councils, post-WW2, by the prominent builders of the day. Concrete...
I want to purchase a property for a potential serviced apartment; it also works at 8.5% yield as a Buy-to-Let.
I had a JV partner who was going to put in the deposit with the mortgage in my name. My mortgage broker has informed me that no lender will accept a deposit unless it is from a family member. I have not heard this before, is there any way round this?
This has been standard lender practice for some time. BTL lenders prohibit you from borrowing the deposit, their criteria states that deposit must come from your own savings. You cannot even borrow from family, it must be a gift and the gifting family member must not have any interest in the property.
They insist that you use only your own cash for deposits and they will drill down by requesting bank statements until they are satisfied it is your own money or decline to lend when they discover it is not.
There are several reasons for this stance. Lenders consider it...
This is a little different to the usual questions I get asked, but quite interesting to consider. The windfall could come from a number of sources - an inheritance, some good property deals or - as this questioner suggests winning it!
If you won £500,000, how would you invest it to maximise your monthly cash flow?
The answer you would normally get from mortgage brokers/advisers is to use your cash as 25% deposits, get 75% mortgages e.g. you could buy 5 x £400k properties, put down 5 x £100k deposits; you could of course buy more properties at cheaper prices.
Whilst this would no doubt generate multiple fees for your broker (surely not why they advise it?!) it is also a finite use of your resources. Once you had used up your cash on 5 or 20 properties that's it; granted you should have created a good income for yourself, but your capacity to continue buying is exhausted.
As an alternative you can consider buying one property at a time -...