A breakthrough strategy in property investment could slash the upfront costs for buying investment properties by as much as half, allowing savvy investors to acquire two homes for the price of one. The 'Property Funding Formula' focuses on snagging discounted deals from motivated sellers, rather than solely targeting distressed or run-down properties.
The conventional method of saving a deposit and waiting for capital growth before refinancing can be a slow process. Another popular strategy, BRRR (Buy, Refurbish, Refinance, Rent, Repeat), aims to speed this up by adding value through renovation. However, it requires additional capital for refurbishment works and reliable contractors.
The 'Property Funding Formula' stands out by targeting genuine discounts on properties due to the seller's personal circumstances. For example, a property worth £200,000 could be negotiated down to £160,000 – a 20% discount. Under a traditional buy-to-let mortgage, this would require a £40,000 deposit and other costs totalling around £53,200.
By combining bridging finance with pre-arranged long-term refinancing, the new strategy could reduce the cash shortfall to just £10,000 in this scenario. Additional costs would include stamp duty (£11,200), legal fees (£2,500) and a bridging fee (£3,000), bringing the total cash required to approximately £26,700 – almost half of the traditional method's cost.
The proponents argue that by reducing cash tied up in each transaction, investors can achieve faster portfolio growth and more efficient use of their capital. The key principle is not to find more money but to make existing capital work harder through strategic purchasing and funding. Experienced investors know that building wealth through property involves capital recycling and leveraging the right funding strategies.
This approach highlights the importance of finding motivated sellers and working with specialist brokers and solicitors knowledgeable about same-day remortgaging and private bridging finance strategies. Standard brokers may not be familiar with these methods, making expert partners crucial to success.