As you probably know, you need a deposit to buy an investment property.  So what happens when you don’t have a deposit?  Well its simple – you just borrow it!  I did this a few years ago, to the tune of £100,000 or so, invested it wisely and now never have to work again. 
 
The key is you have to find someone who is willing to lend.  Back then the personal loan market wasn’t so developed so it was hard for me to get finance and I ended up paying up to 22% APR!  But even though the interest rate was that high I still made phenomenal returns. 
 
You will be glad to hear I have found a lender that lends at 5.7% APR and they’re not too fussy.  For those who wish to skip straight to this lender then click here and fill out their simple form.

For those who want to find out the ‘nuts and bolts’ on how the figures work then read on…
 

The way you derive an income from a property portfolio is to buy POSITIVE CASHFLOW PROPERTIES.  This means the rent covers:

1. The mortgage
2. The personal loan
3. The repairs
4. The agent fees

These properties do exist even though they make only 0.1% of the properties for sale currently.  A cashflow positive property that we source for our clients are typically bought for £40,000 and are rented out at £400 per month.  So if we were to do the monthly profit and loss account the figures would look like this:

Rent per month   £400
Mortgage (87% @ 4.99% Fixed) £145
Personal loan (5.7%, 120 month) £68
Repairs    £25
Agent Fees (10%+VAT)  £47
PROFIT PER MONTH  £115
 

To buy a property like this you need a 13% deposit working out to be £5,200.  When you include legal fees you need about £6,000 per property.  I have found a lender that will lend £25,000 to most applicants at 5.7% APR.  With £25,000 you could buy 4 of these properties.  This would give you the monthly profit of: 4 x £115 = £460 per month.
 

To apply for this loan then click here and fill out their easy form.

Ajay.

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Posted on: 26th Feb 2008