This strategy is something I teach as part of the Ninja Investor Programme and it’s often a revelation to my students. It’s all about being smart with your financing.
There are some criteria to take into account:
For smart investors, properties in need of a serious refurb are negotiable in relation to price, depending on the situation that may be as much as 50% below market value. No mortgage lender will be interested, but this is an opportunity for you to make a significant profit.
Delayed completion bridging works by agreeing some specific things as part of your negotiation with the vendor. These are:
Let’s say that the property is for sale at £100K, but neighbouring properties are selling at £180-200K. You should be able to get a bridging loan for at least 70% of £180K. That’s £117K, giving you not only the purchase price, but a big chunk towards your refurb costs.
As soon as contracts are exchanged you can get started on the refurb and when completion takes place, you can either resell or remortgage at the full £180-200K (probably at the higher end if you’ve done a good job of the refurb).
Not only does this allow you to purchase properties without a massive nest egg to invest, but you will get most of your cash back out on completion.
You can learn more here: