“Raising Finance Using Creative Thinking
[As Opposed to Trying to Duck & Dive Using Tough NMD Strategies”
How do I Buy Property with No Money Down?
There are actually many ways to buy Property NMD, but most people focus their time and energy in the wrong place, and it can end up costing them a lot of money in expensive fees to bridging companies, high administration costs and £10,000’s in lost deals because many of the strategies either don’t work, only work for a short period of time or rely on you having to create complex finance structures that vendors neither trust nor understand
So we’ve complied a brief list below of some of the areas you can focus on to raise cash for deposits to buy Property which is by far the safest, most time tested and cheapest way to buy Property
Of course you are going to buy significantly cheaply enough to be able to remortgage and get all of your deposit and more back out, aren’t you?!
And just to show you it is possible, here is proof of 2 cash-back cheques our investors received over the last week from deals we did for them:
You could potentially raise finance using the following methods:
We recommend this strategy as it is probably the cheapest money to borrow outside of your family and utilises money that is otherwise sitting idle
You can release equity from your Property using the following types of mortgage products:
Straight re-finance [remortgage]
You can also Offset the interest portion of your mortgage payments against your tax bill [to reduce it] because loaned money is not taxable
Are a fast but expensive way to raise finance. This is not recommended over remortgaging but if you can make more in buying a property than the cost of the loan, then it is a strategy worth considering. We would only recommend using this strategy if many of the others here have been exhausted
<p”>Repayments on loans are generally ‘top-heavy.’ This means that you are paying off predominantly interest at the beginning of the term, ensuring that the bank makes maximum profit if you redeem early [pay back the loan before the agreed end of the term].
This is an even faster but even more expensive way to raise finance. We personally do not recommend this avenue, but we have added it here because it is a strategy that some people have used successfully
Be very careful here, make sure you know the terms of the credit card, and be careful with balance transferring/0% deals they can affect your lendability [Banks recently changed the way you are credit scored, and outstanding balances can increase your risk to the bank and subsequently reduce your ‘lendability’]
An expensive but flexible way to borrow money because you only pay interest on what you borrow. If you run a company, have a good relationship with your bank or have good cashflow, a bank will very often give you a significant overdraft facility
If you are a Barclays Premier member, you can get a pre-approved loan for up to £25,000
This is probably the most overlooked yet underused strategy for raising finance that we believe is one of the best for raising finance and making money from Property
One of the most frustrating things to happen in Property is for you to have a great 30% BMV deal and no way to finance it…
Private investors are a specific group of people who have cash that they want to lend and make money from. They can appear in the guise of family members, business men with spare cash, bridging loan agents, angel investors [Dragon’s Den style], people with cash but no time, even find managers are now buying up Property…
The benefits of having a private investor to fund your Property purchasing are as follows:
-Experienced & knowledgeable
-Rich and want to make more money
-Not using your money lowers your risk
-Great way to build your contact base [Look at Levi Roots from Dragon’s Den]
-Will teach you about structuring contracts and legals
How private investors will want to structure a deal:
This is important, because if you do not know the legalities they will tie you in knots…
Property Title: your name, their name or joint names?
A good friend of ours buys properties in joint names as he knows the backer well. Another good friend of ours has a rotating policy of ‘one for you, one for me’ using private investor funds
How do they protect their loan to you:
Charge or restriction on your Property or the properties you purchase? How they make their money:
Charge interest or profit share? Interest charged daily or monthly, arrangement fees, early redemption penalties or exit fees
This takes the private investor one step further. People like James Caan, Richard Farleigh and the guys on Dragon’s Den have made a career out of lending people money to set up or expand businesses. DO you know how to structure a deal with a business angel? Equity share, interest payments on money they lend to you or profit share?
Where to find them:
1. Property networking events
2. Bank functions
3. Rotary club
4. Investment clubs
5. Business link
6. Charity functions
7. Fancy restaurants
8. Property investment forums
9. Business-minded friends and family
10. Any business owner in your town
This one might sound a bit way out, cheeky, or even a little nuts, but stay with us for a second. Do you have a family member.
who is a bit further down the road of life than you. If so there is a big chance that:
A) They stand to pay a massive amount of inheritance tax [or you do!]
B) They may want to help you to a better life and actually see it in their lifetime
C) They might be able to spend a bit of their own money they have protected before they go…
JV [Joint Venture] with family members
Do you have family and/or friends who have taken an interest in what you do? Perhaps you know people with money and no time. One young chap who Mark mentored actually put a full business plan proposal to his mother and she went into business with him: he buys the properties: they share the profits. You can meet him at our events as he regularly shares his story of how he has bought 6 properties in 6 months without any of his own money
Do you have excess possessions that you could sell to raise finance? Perhaps you might dismiss this one, but we wouldn’t.
When I [Rob] was £30,000 in debt in 2005 I sold 3 TV’s I had, digital video camera, suits, shirts, ties and cufflinks and all sorts of other possessions I never used to raise money to help me though a tough time in my life. This contributed in no insignificant part to a £multi-million Property portfolio
Redeem a pension
Do you have an under-performing pension that you could make work for you more? Perhaps you could cash this in and use the money to build a better pension buying Property? There may be early redemption penalties that are worth paying for long term profits
Perhaps you also have an endowment policy that you could redeem