How to Go About Raising Property Investment Finance for Buy-to-Let
Today Rob discusses how to go about raising finance for buying an investment property. There is, of course, the traditional method which is through a mortgage but there are other options as well. These include putting together joint ventures and thinking hard about how to use the money you already have. Whatever your situation is there's a strategy for you.
The Question
Hello and welcome to Property Investments UK. Today's client question comes from Daniel who wants to know how to go about raising finance to buy an investment property.
So the question is...
"Hello, I want to know how to create passive income through real estate. I've talked to a friend that works in the bank and he told me that I need a massive salary in order to get more credit from the bank. Is there some trick shown in your training course that will make banks lend you more money? Or, do you make a down payment and then save money for another down payment and hope that your salary is high enough so that you can get credit? Or, do you refinance the first property? Thank you."
Speak to a Mortgage Broker or Financial Advisor
So when you're looking into buying an investment property and therefore looking to raise finance from a bank I would recommend speaking to a mortgage broker or financial advisor to see what products are going to be best suited to you. We are not mortgage brokers and we don't offer advice based on your particular circumstances. If you speak to a broker they can give you the advice you need on what products will be best suited to you, as well as advise on other matters such as how much deposit you're going to need.
Playing by the Rules
With regard to the process of raising finance, you don't want to try and trick the banks. There's no need to even try. We don't cover any type of creative finance in our property training and our approach to finance is very safe and focussed on long-term goals. Our aim is to teach you how to go from buying an investment property to build a property business that is sustainable over the long term. We teach a variety of different methods for raising finance (methods that are adaptable to changes in the financial market). But, whether we're dealing with banks, mortgage brokers or financial lenders of other descriptions we like to do things properly.
It Doesn't Have to be a Mortgage
You don't necessarily need to just rely on what many perceive as the traditional way of buying a property which is with mortgage finance. There are plenty of other options. If you're in a position where you can buy with cash, fantastic. You can also buy multiple properties with a single cash pot.
Buying an Investment Property with a Joint Venture
You could also consider things like joint ventures. We've also covered how to raise finance from not just banks, but from other financial lenders, investors that may want to do joint ventures with you on a property if you were interested in that way of doing things.
You don't have to focus on mortgage products or mortgage finance. There are other options.
If the idea of joint ventures has got your interest you can learn more by reading our post on getting started in property with no money using joint ventures.
Everyone is Different
The strategy you adopt for raising finance will depend on your starting position. Everyone starts from a different point. If you're in a position where you don't have a lot of funds to start with but you want to get involved in property and build a property portfolio, then there are plenty of strategies that are out there for that.
Of course, you want to raise finance, initially, to fund a deposit, or to buy a property outright with cash (that is if you don't want to use or leverage mortgage finance). We cover cash-flowing strategies in our training where you will learn how to get started buying and selling houses without having to have large pots of money.
Read More
- With one pot of money should I buy one property or two?
- Raising finance with joint ventures
- The secrets to successfully raising property finance
- Retire early using the buy-refurbish-refinance strategy
- Discover property as a pension plan – with vanilla buy to lets
- How to get started in the property business
Putting it all Together
Now, using a combination of these different strategies will give you a great head start depending on whether your cash rich and time poor, time rich and cash poor or somewhere in the middle. You'll need to adopt a strategy that's focused and suitable for you and your situation.
Everybody will start from a different position from day one and you're not going to build a property portfolio overnight. It's about the long-term aim of building a property business that's going to sustain over and grow into a portfolio that could be a pension pot or plan supplying you with income for years and years to come. You want to do it sustainably. You want to do it correctly.
So, Daniel. Let's go back to your original question. Don't concern yourself with either trying to kid the banks or raising finance creatively. There are plenty of safe, straightforward methods to raise finance - mortgages, cash investors with property joint ventures, or building on your own financial pot by using cash flow strategies. Check out our links below which will give you a better indication of how some of those strategies work.
Join Our FREE Property Investment Training Programme Today
Sign up for our free online property training course today.
In there we cover a range of different property strategies to help you get started on building a long-term property portfolio or creating a cash flowing property business.
We also look at ways to increase your return on investment with any of the properties you may be considering and we also have a couple of cheat sheets and downloadable documents.