In a recent video on my YouTube channel, I showed you exactly how you can buy 10 houses for only £50,000. You may be thinking I am talking about buying really cheap houses abroad, maybe for £5,000 each, but you would be wrong. I am talking about 10 houses in the UK that you can rent out and make a good income from. If you don’t have £50k yourself, you can get a loan or a silent partner to cover it.
This method is how the rich invest in property. What the poor and middle-class do, is they work really hard in a job and save up to buy a single property. What the rich do is buy many properties with the same pot of cash. In the video (above) I explain exactly how you can do this too. I highly recommend watching the video until the end if you want to do this strategy yourself. In this article, I will provide a brief summary of the method so you can decide if it is for you.
1. Find the right property
The typical way to purchase a buy-to-let property is with a mortgage. Buy-to-let mortgages normally require that you put down a deposit of 25%. The average house in the UK right now is about £300k. This means you will need to put down £75k as a deposit. You will also need to pay Stamp Duty of about £10k. On top of that, you will need to pay your legal fees and maybe for a very light refurbishment. In all, you probably need about £90k. Even if you buy a cheaper house for £150k, you will still need about £45k and you will still only have one house.
If you want to buy 10 properties for £50k, you need to find properties that are in really bad condition. For example, find a street where most properties sell for £200k but there is an uninhabitable property that you can get for much cheaper. If the property is uninhabitable it will be out of reach of most buyers, as you can’t get a mortgage against such properties.
2. Use bridging finance
So imagine you put an offer on the property for £100k. This is realistic as there will be a lot of work needed on the property. You can’t get a mortgage on the property and you can’t buy it cash because you only have £50k. You need to get something called a bridging loan. A bridging loan is designed to bridge the gap between you buying the house and getting a mortgage. A bridging company will typically loan you 65% of the purchase price and up to 100% of the refurbishment costs.
This will mean you need about £35k down for the bridging loan; about £5k for legals; and the other £10,000 for interest and fees for the bridging loan;
3. Recycle your cash
Once you have done up the property, it will be worth £200k like all the others on the street. You can then get a buy-to-let mortgage on the property. The mortgage will typically be for 75% of the new value. This means you could pay back the bridging company and potentially get all the money you put down back as well.
Now you can go find another property and do it all again! You can do this as many times as you want! If you need a hand getting started, why not book a ticket to my next course. You can book a ticket here, they are just £1 each.