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INVESTING INTO RESIDENTIAL PROPERTY

INVESTING INTO RESIDENTIAL PROPERTY

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INVESTING INTO RESIDENTIAL PROPERTY. ABOUT US. Established 1990 Nationwide coverage through regional account managers All former lending managers with various banks Strength in numbers - volume business Founder members of the National Association of Commercial Finance Brokers. - PowerPoint PPT Presentation

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Page 1: INVESTING INTO RESIDENTIAL PROPERTY

INVESTING INTO RESIDENTIAL

PROPERTY

Page 2: INVESTING INTO RESIDENTIAL PROPERTY

ABOUT US

• Established 1990• Nationwide coverage through regional

account managers• All former lending managers with various

banks• Strength in numbers - volume business• Founder members of the National

Association of Commercial Finance Brokers

Page 3: INVESTING INTO RESIDENTIAL PROPERTY

We are recommended by:

• ARLA - the Association of Residential Letting Agents

• Many University Accommodation officers

• NFRL - the National Federation of Residential Landlords

• Most regional Landlords Associations

• Etc., Etc., Etc.

Page 4: INVESTING INTO RESIDENTIAL PROPERTY

YOUR QUESTIONS ANSWERED

• Why borrow?

• Who to borrow from

• Alternative funding strategies

• Future Purchases

Page 5: INVESTING INTO RESIDENTIAL PROPERTY

LENDING SOURCES

High street banks?Recent survey said 96% would

approach own bank.....

but, are they the best ?

Page 6: INVESTING INTO RESIDENTIAL PROPERTY

THE HIGH STREET BANKS

• Inconsistent?

• Policy - is funding for property flavour of the month?

• Attitude of manager very important

• A change of manager and.......?

Page 7: INVESTING INTO RESIDENTIAL PROPERTY

HIGH STREET BANKS DRAWBACKS

• Facilities almost always repayable on demand

• Subject to annual review - one year’s poor accounts and facilities can be restricted ..... or even withdrawn

• Usual term 10 years - restricting cashflow hence expansion

• They are.....

Page 8: INVESTING INTO RESIDENTIAL PROPERTY

..... IN CONTROL!

Page 9: INVESTING INTO RESIDENTIAL PROPERTY

WE CAN HELP YOU BY:-

• gaining an understanding of your requirements

• suggesting options available to you• exploring alternative strategies• identifying the most appropriate lenders• presenting your proposal in the most

effective way possible• negotiating optimal terms

Page 10: INVESTING INTO RESIDENTIAL PROPERTY

PLUS POINTS• Our advice is independent

• We transact business with over 40 lending institutions

• We specialise in advising about mortgaging residential investment properties

• Viability is our lenders prime concern - NOT YOUR SALARY

Page 11: INVESTING INTO RESIDENTIAL PROPERTY

AN ALTERNATIVE STRATEGY

PAY INTEREST ONLY

HOW DO YOU FEEL ABOUT THIS?

Page 12: INVESTING INTO RESIDENTIAL PROPERTY

GIVE IT SOME THOUGHT

Page 13: INVESTING INTO RESIDENTIAL PROPERTY

WHY BORROW?

• Because loan interest rates are often lower than rental yields - i.e. cashflow generation

• Because property increases in value

Page 14: INVESTING INTO RESIDENTIAL PROPERTY

CONSIDER THE FACTS

• City analysts are predicting a 100% rise in house prices over the next 10 - 15 years

• Sounds too good to be true doesn't it?• When did you purchase your first house?• How much did you pay for it?• How much would that house sell for now?

• Get the message?

Page 15: INVESTING INTO RESIDENTIAL PROPERTY

CONCLUSION• If borrowing to invest into property makes

sense why be so eager to repay?• Why not utilise cashflow to maintain your

properties or for further expansion??

• Why not expand to the maximum and sell part of your portfolio in years to come when you wish to repay your loans?

• LET INFLATION REPAY YOUR LOANS

Page 16: INVESTING INTO RESIDENTIAL PROPERTY

CAN 100% OF THE PURCHASE PRICE BE

BORROWED?

Page 17: INVESTING INTO RESIDENTIAL PROPERTY

YES - if there is enough equity in properties already

owned

Page 18: INVESTING INTO RESIDENTIAL PROPERTY

FORWARD BUYINGFACILITY

What is it?

Page 19: INVESTING INTO RESIDENTIAL PROPERTY

• A line of credit

• Giving you the ability to purchase on the same terms as a cash buyer - e.g.... auctions, distress sales, probate, repossessions, etc....

• Use existing equity.....

instead of having to find a cash deposit!

• A Forward Buying Facility is........

Page 20: INVESTING INTO RESIDENTIAL PROPERTY

...RATHER LIKE HAVING

CASH

££££

Page 21: INVESTING INTO RESIDENTIAL PROPERTY

HOW DOES IT WORK?

• Mr Smith has a portfolio valued at £500,000

• Present loan £300,000

• Term - 10 years

• Almost 100% of rental income is used to service the loan!

Page 22: INVESTING INTO RESIDENTIAL PROPERTY

FIRSTLY HE SWITCHES TO

INTEREST ONLY....

So that he can enjoy his profits now, and allow inflation to repay his loan

Page 23: INVESTING INTO RESIDENTIAL PROPERTY

WHAT NEXT?

• Mr Smith remortgaged his portfolio to the maximum - i.e. 80% of £500,000 is £400,000

• £300,000 of this was used to repay existing loans

• This left him with £100,000

• Using his FORWARD BUYING FACILITY the £100,000 was regarded as his 20% deposit which allowed him to purchase further properties costing £500,000

Page 24: INVESTING INTO RESIDENTIAL PROPERTY

Who is IN CONTROL now?

Page 25: INVESTING INTO RESIDENTIAL PROPERTY

THE OUTCOME

• Mr Smith has doubled his portfolio and increased his net income

• Inflation will increase the rent roll as well as the value of the portfolio

• but not the loan or the cost of it

• Therefore, will Mr Smith’s good fortune continue ? !!

Page 26: INVESTING INTO RESIDENTIAL PROPERTY

CAN IT GET BETTER?

• THE MONEY CENTRE has negotiated exclusive deals with lenders offering:

• 80% Loan to value• Interest only - if required• No compulsory insurances• Discounted fixed interest rates• Take a regular look at the rates and terms

on our web site

Page 27: INVESTING INTO RESIDENTIAL PROPERTY

Thank you for your time and attention. We hope

this presentation has been of interest to you

and leaves you feeling......

Page 28: INVESTING INTO RESIDENTIAL PROPERTY

rather like one of our clients

Page 29: INVESTING INTO RESIDENTIAL PROPERTY

IN CONTROL