5 ways to combat the issue with lack of funding in property investing

 

Per request of many clients, I will discuss some of the ways that can be used to get around the issue of lack of funds in property investing, and their pros and cons.

 

1.       Private Finance

Private finance is a mortgage not issued by a bank or mortgage lender. It’s money lent to you by private sources, such as crowd, friends, businesses, even pensions. It can be a great source of funding when you have a deal that can’t get the traditional mortgage. However, private finance is typically more expensive than a traditional mortgage. And depending on what type if finance it is, can have extra costs such as entry and exit costs. So you need to find a deal that gives you enough margin to use private finance and still make a profit.

2.       Joint Venture

You can joint venture with cash investors to carry on investing when you don’t have any of your own funds. It is important to structure the JV correctly so that both parties would benefit from the deal. Other than the financial side, you also need to make sure you discuss your end goal and exit strategy early on. It is no good if one of you want to sell it in 5 years and the other wants to keep it for life.

3.       Vendor Finance

You can tell by the name what this is about. So the seller will finance your deal! Yes this can happen. But you need to find a vendor that doesn’t need the lump sum money straight away, but you buying the property is solving a problem they have (could be cash flow, could be stress.) This can sound too good to be true. Depending where you are based and what type of property you are buying, this can be hard to come by.

4.       Strategies that doesn’t involve huge capital investments

Sometimes, being active in property investing doesn’t have to start with you owning a property. There are strategies such as Rent to Rent (which I explained yesterday), and Lease Options etc. that doesn’t require a big upfront investment. Lease Options is however hard to find in expensive regions such as London. Rent to rent, however, you can do in most places but you would have to adapt quite a lot to the area.

5.       Equity in existing property

And some people already have equity in their own home, which strictly speaking is your own funds, just not readily available. That equity is sitting there, giving in no return. If the cost of releasing that is much less than the return of your investment, why not!

If you missed my explanation on a creative finance strategy Rent to Rent, which I used to build up a portfolio of 60 properties in 5 years, each bringing in £700-1000/month cashflow, check out my post this Monday. Or CLICK HERE to book a free strategy session with me, and I will share with you the exact type of properties that will give you £700-1000/month compliantly.

Let me help you achieve financial freedom through investing in property!

Emma