For many property developers buying a house without a mortgage may be the only option (especially for older investors) but don't worry. There are plenty of other options available. One is to enter into a property joint venture with another investor. Another is to learn how to leverage the cash you have available. Whatever your situation, there are always other strategies when it comes to raising finance for property development.
[0.50] Talk to a mortgage broker
[1.23] Cash flowing strategies
[1.53] Property Joint ventures (JVs)
[2.27] Other strategies
[2.41] Buy-refurbish-sell (flipping)
[3.15] Join our FREE training course today
Today we're looking at client's question regarding how to go about raising finance for property development when you're at an age which will make securing a mortgage more difficult.
So the question is...
"At 55 years old, I'm probably a bit late for mortgages. What is the best way to go about raising finance to buy property for buy-to-let?"
1. Raising Finance for Property Development
When it comes to purchasing a buy-to-let property, you are going to have to raise finance for it in some way. This can be a mortgage, you can buy it with cash, or you can enter into a joint venture agreement. If you are 55 years old or older this will present you with some difficulty when it comes to securing mortgage finance.
We aren't mortgage brokers so we can't give you direct advice in terms of what would be best suited to your circumstance. I recommend that you do speak to a mortgage broker or financial advisor. Who knows? You might be pleasantly surprised. There may well be a few options out there that are entirely suitable for your situation. Options that will allow you to secure a mortgage for your buy to let investment.
3. How to Buy A Home With Cash
If you want to grow a property portfolio but you're not in a position to raise finance using a mortgage then there are other options and strategies that don't involve mortgage finance.
Some of these alternative strategies are what we would call cash-flowing strategies. So, instead of using mortgage finance to buy the property you would initially have to build up a pot of funds to allow you to buy those properties with cash. Obviously being able to put a cash offer on a house would be great but not everyone can do this. It could also be that to have some access to mortgage products but you will need a large deposit. So, using a cash-flow strategy first, instead of jumping in with a buy to let strategy may be one option.
4. What Are Joint Ventures?
Another strategy is using something called property joint ventures. This is another strategy that doesn't require mortgage finance and it's entirely flexible and non-dependent on your age and experience. It is simply a case of finding and partnering with an investor who is willing to fund your buy to let investments.
I've included a few links below that will give you more information on this process.
And for more information see joint ventures in property transactions — overview from Lexis Property.
5. Other Methods for Raising Finance For Property Development
There are many other methods for raising finance for property development but you will need to think beyond building a simple buy to let portfolio. Maybe, over a period of time, you can recycle your deposit pot to buy a number of properties. Maybe you can split your deposit pot into two right from the outset. Maybe you might want to consider flipping your properties. That is to say adopt a strategy of buying houses in need of renovation, doing the necessary work and selling them for a profit. You might not need a portfolio at all if you can get the same return by doing this.
6. Putting It All Together
So if you are 55 years old or older all is most certainly not lost. There are plenty of options for raising finance for property development and plenty of ways of buying a house without a mortgage.
Here are a few links to get you started. I've included articles on bridging loans, articles on refinancing strategy and a few other things besides. I hope you find the material useful and if you have any further questions don't hesitate to get in touch.