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Investing in Property With a Windfall

bridging finance Aug 25, 2021

When you get an unexpected windfall, especially a substantial one, it’s not going to earn you anything sitting in your bank account.  If you’re into property - or you see it as the means to get into property it’s easy to get carried away.

For arguments sake, let’s say you’ve just got £200K land in your bank account.  If you mention ‘I’ve just inherited £200K and I want to get into property/buy a good property investment’ you will inundated with requests to put your money into someone else’s project.  Firstly, when you invest in someone else's project, you cede control over your money to them - if they screw up, it costs you.

If you want to hand it all over to someone else - that’s unadventurous thinking.

So let’s explore what you could do with it - without risking it on someone else’s project.

With £200k, you can do your own projects; you don't need to invest in someone else's.

Ask a mortgage broker what to do and the typical answer will be - buy 4 properties with a £50k deposit for each and the rest on mortgages, or a variant of that, but essentially split up your capital into deposits.

In my book that’s limited thinking.

Basically what you’ve done is tie up your capital in property and now you have four (or whatever) mortgages to service every month.

What you need is Inspired Thinking

Turn everything around and seek out unmortgageable, but fixable properties. These properties can only be bought for cash because lenders have basically put a metaphorical red plague cross on the door. However, most things are fixable if you know how.

The biggest plus is that owners of unmortgageable properties know that selling isn’t going to be easy - and that they can only sell to cash buyers - and cash buyers never pay full price so, in many cases, they’re already prepared to sell below market value.  It’s not unheard of for an unmortgageable property to sell for 50% below market value. 

This opportunity leads to a substantial uplift in the value once the property has been fixed up.  The cost of fixing up needs to be calculated before you close the sale, though - to ensure that there’s some profit in the deal too.

Use your £200k to buy an unmortgageable property, fix it up and then:

  • Sell and bank the cash profit
  • Rent out and refinance at the uplifted value, pull all of your cash back out (if you do it right)

Now you still have £200k (at least) cash in your bank account to repeat the same process as many times as want to.

You can learn more here:

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