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A windfall to open the door to property

Saving up – especially in today’s economic climate – is tough, and when you need to save thousands to amass enough for a deposit on your first buy-to-let, it can take years.  However, many people start looking at property when they receive an unexpected windfall.

This might be a chunk of cash that comes as an inheritance or may even be a property, that gets the little grey cells thinking about investing in property.  So what is the best way to invest your money?

Let’s imagine you’ve inherited a generous £500K – how would you invest it

Most brokers would suggest you put your cash down as a deposit and get 75% buy-to-let mortgages.  For example, invest 5x£100K deposits, means 5 properties worth £400K each or 10x£50K deposits on 10 houses worth £200K.

Your broker will be rubbing his hands with 5 or 10 fees, and you’ll have a good rental income.  But now you have nothing left to buy any more properties and increase your portfolio and profit.

The Ninja investor approach

Buy one property at a time – but be selective about the kind of property you buy – then refinance and repeat again … and again and again.

How does this work?

  1. Buy your target property for cash – no borrowing.  That makes you a cash buyer and give you access to properties other investors can’t touch.
  2. Negotiate a below market value (BMV) purchase price (cash buyers never pay full whack)
  3. Complete the purchase within days

Zero borrowing costs and now you can leverage your capital to grow it quickly.

Next steps

Refurb your property to bring it up to its highest value – now is the time to get a buy-to-let mortgage at it new higher value.

You’ll tie up way less than 25% of the purchase price, so after refinancing, you’ve still got almost all your £500K capital (or whatever the amount was you started with).

As they say ‘rinse and repeat’!

This increases the number of properties you can buy and – of course – the potential income you’ll earn from them.

Top tips

To make this work you’ll need to know the best properties to focus on and largely these are the ones that are considered unmortgageable.  The right choices of these have massive value locked in and:

  1. Most buyers can’t compete as they need a mortgage to purchase
  2. Sellers know that they can only sell to cash buyers and cash buyers never pay full price, that means they’re ready to negotiate a price below market value.

If you’re prepared to make an outrageous offer (as much as 50% BMV) there are serious profits to be made.

To succeed with this strategy you need to:

  •  Understand what makes each property unmortgageable
  •  Know that you can solve the problem
  •  Know the cost of solving it is significantly less that the value added by fixing it.

This strategy has the potential to grow a multi-million pound property portfolio and allow you to quit the day job and still have a very comfortable lifestyle.

You can learn more here:

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