Its a beautiful morning, you wake up naturally as you no longer need an alarm. The sun shines into your room through your balcony window and your mind is at rest, you have no financial worries and today's schedule is totally free, you can do whatever you like. Two months ago, you completed on a property deal that pushed you into comfortable financial freedom and your now ready to start a new life, where your in complete control. You had imagined this moment many times over in the past and now you are here it feels even more blissful that you had previously thought. Life was good...
Wait a minute. That's not your reality and its not my reality either. The truth is most of us are plodding on and although we dream of a bliss life where you can fulfil all your dreams through financial freedom, many people live month to month, paycheck to paycheck.
I think we need a reality check. Let's start at the beginning.
It's a common story. You are interested in investing in property but you simply just don't have that lump sum of cash you need to get started. Who has £15,000 - £20,000 lying around anyway? Okay maybe some people do, but the average person does not have that kind of money at their disposal. In this article we will explore 5 ways in which you can raise money to fund your first property investment deal. These are realistic and proven strategies which will help you be able to get into the property market. Not every way will work for you, you may be limited to just one or two, but the message really is - if you want it bad enough, then there really is a way to raise the money!
Enough waffle, lets get straight into these ideas!
1. Re-Mortgage Your Residential Home
A relatively well-known and common strategy, re-mortgaging your house to release some equity from your property is a great way to raise capital to invest with. Although many people may aim to pay their mortgage off and eventually be mortgage free, residential mortgages are actually some of the cheapest loans that you can get. For example, if your house is worth £100,000 but you only have £50,000 left on your mortgage, lenders will offer you up to 90% of the value of your house should you choose to remortgage with them. This means that you could potentially "take out" £40,000 from your house and invest it. Your mortgage payments would go up but the increase would be far smaller than the amount of cash flow you could achieve by investing £40,000. If you choose to buy a couple of buy to lets, for example, you would receive monthly cash flow and have two capital-appreciating assets. That is how wealth is grown over time.
2. Phone a Friend
Just like on "Who Wants to be a Millionaire?", contacting friends and family is an effective, common way in which to get help. Many family members and friends may have money that they are unsure what to do with or are not utilising the best way possible. Although it may seem daunting to ask someone, what is their to lose? Make sure that you know what you are talking about, as you can't expect to be handed money without a proper plan in place.
3. Get a Side Hustle
There are numerous ways in which you can make money as a "side hustle", which can help you make money on the side and save up for that initial deposit. Some basic but effective ideas could be:
Buying and selling goods on online marketplaces such as eBay, Amazon, Gumtree, Facebook marketplace etc
Car boots sales. Many local areas have weekly car boot sales with opportunities to make hundreds of pounds each week.
Buying and selling cars / furniture through Facebook, Gumtree etc.
Sell your services. Whether that be cutting grass or creating a website, there are so many skills that you can learn that can be monetised. Some ideas could be graphic design, video creation and editing, creating a website, mentoring a student or giving lessons for a musical instrument. The key is to recognise and/or learn skills and then utilise them to help others, charging for your work.
This list was not exhaustive - be creative and find a way in which you can create extra income in your spare time. The internet has made it as easy as it ever has been to make extra money. Use your initiative and get going!
4. Find a Joint Venture Partner
A joint venture (JV) is simply a business arrangement between individuals in which they both agree to fulfil certain roles and share the risk and the benefit of the deal. Joint ventures can be a great way to get started in property with little or no money. If you are time rich but financially poor, you can complete many of the time consuming jobs for others whilst they will be happy to put in the money for the deal but be hands-off.
The reality of JV's mean that both parties must fully understand what is expected of them whilst also being legally protected by a contract. Whilst they sound like the perfect way to get finance, business can be brutal and people should be careful and aware of who they are getting into business with and what their track record has been.
A JV partner could really be anyone, close or not. How can you find them? This is when your network comes into play. Your reputation and network are key and should be continually grown and pro-actively worked on. Attend events, ask to meet with people, offer your help and always conduct yourself in an honest and professional manner and opportunities will be created.
5. Sell your belongings
We probably take for granted all the belongings that we are able to have. In a developed country like the UK, "things" are everywhere and to be honest, we actually need a lot less things than we think. If you are driven and motivated to start your investing career, begin in your own house - clothing, gadgets, cars, games consoles, fancy ornaments, artwork, musical instruments, furniture... the list of things that you can monetise is endless. I'm not saying sell everything and live in an empty shell, but i'm sure that if you spent 1 hour clearing out your house, you would find a big pile of items that you wouldn't be heart broken if they were gone. Get them listed on eBay and Gumtree and before you know if your deposit pot will have grown.
In conclusion, the main point to take away is to take the initiative and be pro-active in doing all you can to get your deposit together. Every one of these points involve taking large amounts of action. Once you understand the concept that it's not a matter of time before your first property investment but it's a number of actions before it comes to fruition. Take action and each action will get you closer and closer to getting what you want!