Here’s another great question. Seeing as last weeks went down so well, I thought I’d share again:
I have 1 rental property, but looking to buy the next. I feel my progress is so slow due to saving 25% deposit. Is there a way of avoiding the full 25% deposit or any tricks to speed up the process?
Great question… here is the answer in it’s full glory.
- Reinvest your net rental profit (or save it). I have a stocks and shares ISA that I use and it builds up pretty quickly
- Get a savings plan for your own income. Aim to save £500 per month… from both 1 and 2 you should be saving around £800 per month / £9,600 per year – after year two plus some capital appreciation on property one you should have deposit two
- Want to speed up the process? Get networking and find likeminded investors or JVs who you trust… use this to buy a property whereby you give them a monthly return plus after two years you pay them back at remortgage or sale
- If number 2 is too slow you could use the riskier method of peer to peer lending + potential interest free cash from credit cards. To do this you would have to buy a property at a rock bottom price, do it up and remortgage in 6 months time for an increased value of 25% – 30% more so that on remortgage you can pay back your lender + credit cards – you can click this link to see a property where a Member is doing exactly that.
(Be wary for point 4 it’s not easy. You must have experience in development and be able to complete the project on time and under budget!)
Can I be really honest with you?
I’m going to be anyway…
Every time you double your portfolio it’s slow going i.e 1 to 2. BUT once you’ve got number 2, number 3 comes quicker because you’re building your network and getting access to more finance resources as well as building equity + cashflow.
Consistency is key.
Oh and yes, some lenders are offering 80%-85% LTV, but these interest rates are high, which doesn’t help the stress test and you definitely need to be getting the LTV down ASAP… so it’s better to aim for a 25% deposit!
I hope that was useful for you!!
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