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How to Invest in No Money Down Deals

By 18 November 2020No Comments

Property house red brick

A ‘no money down property deal’ can cover a range of areas (such as getting people to invest in you via Crowdfunding and Peer2Peer Lending or a Rent2Rent strategy). Another way is to buy a property without having to put down a deposit.

No deposit – 100% mortgage finance

This can be a high-risk strategy and the reason it’s possible to do this is because you manage to get the property at BMV, and get 100% finance on the listed value of the property. You then rent out the property and collect a monthly income while at the same time your bricks and mortar investment accrues in value (and which currently in the UK can vary from 3% up to 6% per annum, depending on where you live and the stare of the local property market.

Attract investment money via Crowdfunding

Another way to invest in property without paying out any finance in the first place is by using other people’s money. This is where Crowdfunding et al comes in. In order to get people to invest in your proposed development though, you would have to be squeaky clean in terms of your finance record and be extremely credible with successful and similar past projects to point to.

You’d also have to do a lot of upfront networking and convincing, as well as find the development in the first place. Most people who invest in a Crowdfunding platform can expect returns of from 5% up to 12% – depending on the deal, its location, how quickly the units sell or rent for etc.

Rent out other people’s property

Rent2Rent is a property investment strategy which involves approaching a harassed landlord (usually the owner of one or several HMOs), suggesting that you manage and rent out the rooms for him – at a reduction.

This way, you pay the landlord less rent than what you charge your tenants for and then you pocket the difference. For instance, you may pay him or her £325 per room, but rent it out to tenants for £500 per room. The more rooms you rent out, the higher the monthly return. You’re not investing in property per se, but it gives you a means of saving for your first investment and also gives you a foot in the door so you get an understanding of how buy to let works on a day to day level. And with HMOs, you’ll be getting plenty of experience as it can prove to be a tough – and time-consuming – gig!

Investing in property with Sourced

Here at Sourced, we train our franchisees in all different property strategies and offer ongoing support, paired with a 100% funding facility. Download our Franchise Prospectus to learn more.

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