How Property Investment Builds Wealth Over Time

Question 1: My brother and I own a buy-to-let outright. We bought it in 2008 for £136K and it is now valued at between £300-325K. Would you refinance it to buy one or two more properties?

Answer: We absolutely would refinance that property. Doing the calculations, if you lent 75% LTV on that, you could pull out £225K.

In certain parts of the UK you could buy as many as 9 buy-to-lets with that money, that are going to make you at least £300 per month, NET, that’s £2,700 per month income. Plus, you’re going to have 9 properties increasing in value as well, that you can again refinance in the future and it will compound over time and massively increase your wealth.

The Benefits Of Leveraging In Property Investment

Question 2: How did you buy an £80K house with £0?

Answer: There are many different ways that you can acquire property low and no money down. Now the specific strategy where we bought an £80K house with £0 is a bit more of an advanced strategy called bridge to buy-to-let.

This basically means, we’re using bridging lending to buy a property that we’ve got at below market value with a view that we then add the value then refinance that property on the higher value and pull all of the money out so I can then pay off the bridging lending.

To give you context, if you take lending on a property, standard lending would be 75% loan to value based on one of two numbers, either the market value which is what it’s worth as it is in its current condition or the price that you pay normally whichever is the lower of the two. So you’ll lend on 75% of the price you pay normally.

Now my bridging lender that I work with in partnership lends up to 90% loan to value based on the market value not the price you pay which massively reduces your amount in. Then when you add that on with getting the property cheap below market value it actually means you can buy it, refurbish it, and refinance it, with no money in for you, that’s one of many ways that you can acquire property with no money in.

Investing in Property vs. Stocks and Cryptocurrencies

Question 3: Why don’t you invest in things like Bitcoin?

Answer: We have no issue with people investing in cryptocurrencies, however, we prefer to invest in something we understand and are educated in.

We know the history of property and the value of property is always going up. Even if there’s a crash, we know it’s going to recover (people will always need somewhere to live!).

And, for our long term investment strategy we plan to hold onto these properties until we die, so they’re only going to go up in value, we know that and are confident in that.

Question 4: You need 3 properties at London prices or £1.2 million, buy dividend stocks at 4% yield and relax.

Answer: With dividend stocks, you don’t have any control over them. The CEO of that company could mess it up and then you’ve lost everything.

For us, property is the safest place to put your money. They say “safe as houses” for a reason. Also, sometimes dividend stocks don’t pay out because the market crashes for example.

We know someone who invested £350,000 in dividend stocks and they’re making between £900-1,000 per month.

We have one HMO that makes us net £1,000 per month and our investment into that property was less than £35,000. If you put £350,000 into property then you could be making a substantial amount of money, a minimum of £4,200 per month. It’s secure, you’re in control, you control the property and lending on it. It compounds over time and where else can you get an asset where you can leverage up to 75% loan to value on it? That’s why we invest in property.