Importance of No Money Down

If you are one of the extremely fortunate few investors that has unlimited access to cash, then Low and No Money Down purchase techniques may hold little interest for you.

But in our experience that's not the great majority of investors. Most Axis clients are extremely concerned to:

1. Maximise the return on investment

2. Maximise growth of their existing capital

3. Create the largest possible portfolio with the least amount of cash contribution

For these three reasons, Low and No Money Down investing is important as it can transform your ability to build a portfolio and generate improved investment returns.

In the next section we work through an example in great detail to explain how the numbers work and how this reflects in growth and investment returns. For the moment, let's take a high level view using the figures we have already spoken about for a property with market value of £150,000 and Axis Below Market Value price of £105,000, with a deposit of 25%:

Standard Investment £37,500 investment
Low Money Down £26,250 investment (based on reduced purchase price)
Using specialist finance Possibly zero investment (+fees and costs)

Return On Investment [ROI]

Over time your investment property will grow in value. Let's assume we reach a point where there is £100,000 of equity in your property, made up by a combination of discount and capital growth.

What ROI will you have achieved?

	Standard Investment	Low Money Down	No Money Down
Investment	£37,500	£26,250	Zero
Profit	£100,000	£100,000	£100,000
ROI	266%	380%	Infinite

Clearly the more you move towards a No Money Down deal the more that your ROI increases - to a point where it becomes infinite with the achievement of a true NMD investment. (Beware the risks - see later!)

Growth in Capital

Let's say that you have £100,000 available. On the above model you would be able, using the numbers above, to purchase 2.6 properties if you pay the market price, but almost 4 properties if you work with Axis and invest in BMV properties, resulting in a Low Money Down transaction.

With a No Money Down you could, in theory, just keep buying and keep buying... a perpetual money machine! What's your capital profit here? Limited only by your ability to continue to find true No Money Down deals. Astonishing but in practice both unlikely and highly risky for reasons we will explore later.

The Axis Approach

Axis works hard to package the best possible investments using a mixture of the hardest negotiation on price and loan finance that's acceptable to lenders. The benefit for an investor is in three parts:

ROC - Return on Cash: Contributing a deposit provides an excellent return on cash investment starting immediately. Typically 10% to 25% pa which is way higher than any possible savings!

BMV - Below Market Value: Contributing immediate equity which is effectively making a profit at the time you buy, far better than waiting for a profit when you sell.

ROI - Return on Investment: The leverage through borrowing on the net price reduces your investment and increases your returns, providing an excellent return on investment as the years pass, whilst minimizing any risks.