Let's Build Your Portfolio! ??

How is it that some clients manage to acquire tens, even hundreds of properties within a relatively short period of time and without being well heeled themselves?

Answer – They embrace creative finance.?

In my last email a few weeks ago, we talked about a strategy that has propelled a number of our clients and one client in particular who targets BMV (Below Market Value) Properties that are tired and need a light refurbishment.?

Once value has been added, we remortgage him to clear off the Bridging Finance and move him onto a BTL (Buy To Let) mortgage. Each property typically gives him an average of ￡300 a month profit after all costs are taken out. He now has in excess of 30 properties. Over ￡100,000 a year of passive income.?

This week I want to share with you how one client we deal with achieved this in one deal.?

So how do you manage to buy property with less than ￡100k of your own money in one deal and achieve passive income of over ￡100,000 a year??

Answer – You buy Portfolios.?

But don’t you need 25% deposit? No. Not necessarily.?

There are three common ways of doing this.?

1.???Use other people’s money (Investor money) and do a Joint Venture with them.?

2.???If they are BMV (Below Market Value) and total portfolio value is >￡1million, you can buy with a mortgage (minimum deposit is 10% of Purchase Price) OR?

3.???Use Bridging Finance or a combination or Bridging Finance and investor money.?

Our client utilised option 3.?

Case Study

Our client bought her portfolio of 49 properties in one transaction through an estate agent. Some estate agents will be asked to sell off portfolios on behalf of existing landlords or banks. They might also be instructed to sell off portfolios as part of someone’s estate. In this case it was a repossessed portfolio that a lender had taken back and given to the agent to sell. Usually, with portfolios?you get a discount as you are buying in bulk and saving the current owner a lot of hassle.?

In this case, because it was a repossession and there was a strict time limit on things, the discount was around 30%. This is not uncommon for repossessions or very motivated sellers.?

When the client came to us they were in a mess. The existing broker had put them with a lender who initially agreed to fund the purchase, along with some private investors the client had brought on, but in the end tried to snatch the deal off them.

We had to act quickly. Everyone was informed and we managed to buy a little more time.?

We got onto a number of lenders in this space, most of which weren’t able to structure it in the way we needed and time wouldn’t allow us to get the deal through.

In the end, this is where relationships are key. One of the lenders we deal with was able to fund a high percentage of the deal with a combination of different funding lines they have access to. The client put in less than ￡100k and their investors bridged the gap.?

There was a very twitchy moment when one of the investors pulled out at the last minute but fortunately the main funder was able to increase their lending and a solution that worked for everyone was achieved.?

After completion of the portfolio, the client was able to access all of the properties, some of which were fire damaged and some needed?more renovation than thought. In the end a decision was made to sell some off separately and keep 32 of them.

Once they were all refurbed, we arranged BTL mortgages to clear off the Bridging and Private Finance and the client was the sole owner of a rather nice portfolio cash flowing over ￡100k a year after costs.?

This was a particular challenging situation but in the end, the client now has a passive 6 figure income from property. Not bad eh!

Bridging to acquire single properties as well as portfolios is something we are involved in day to day. We have Specialist Advisers who deal in these matters and can advise you accordingly. So, if this is something you want to do?please get in touch with the team here.

Although to many, Bridging Finance can appear scary, in reality if you do your due diligence and have a good team around you, it’s a really creative tool to propel you in property.?

Have a great week everyone and hope you’re enjoying the summer despite the weather...

Steve

Express Mortgages is a trade name of Express Mortgage Services Ltd. Express Mortgage Services Ltd is authorised and regulated by the Financial Conduct Authority. [Reg No: 474427] Company registered in England & Wales no. 05167662

Your home may be repossessed if you do not keep up repayments on your mortgage. Some types of buy to let mortgages are not regulated by the FCA.