How To Raise Cash For Investment

Make more profit and smooth the deal flow with cash in your back pocket

Rod Go back a few years and it was possible to build a portfolio with no money. Not easy, but possible. The availability of credit, including loads of credit cards, unsecured loans and high LTV mortgages combined to give investors a unique opportunity to build serious portfolios with... fresh air!

Of course, when interest rates took off, two year fixed rate deals came to an end and a few tenants left and the new rent was lower than the last, a lot of investors went bust! I wasn't very sad to see the end of No Money Down deals.

It wasn't so much the NMD deals, but the way that investors used this process - in fact abused this process.

Roll on to 2010 and the landscape has changed hugely. Mortgage availability is far more restrictive, LTV's are less, property discounts are certainly lower than the heady times of early 2009, and investors wanting to bag the best bargains need a new approach.

The new approach requires cash for deposits. Cash for upfront fees. Cash for reserves in case you have a void. Cash to make sure that nothing goes wrong!

You don't need huge amounts of cash. Clearly it's related to how big a portfolio you wish to build, and what is the value of your investment properties. Buying low cost terraced houses up North for £60K a pop is not the same as investing in Central London where you might not get change out of £300K, or even £3m!

And if you are investing internationally - in the USA for example - cash is king and the very best deals are cash only. Again you don't need much, at Axis we sell tenanted houses in Western New York State from about £16,000 fully refurbished! But you do need cash.

Of course the only point of finding cash for investment is to do EVEN BETTER with your money. Make sure that your proposed investment is worth the sacrifice you are making with whatever you earn on your cash.

The big question is where can you get cash?

We talk daily to clients who tell us they haven't got cash, and then proceed to work out - either on their own or with our suggestions - where they can get the cash from. A surprising number of clients can find the cash when they want to.

It's taken me a while to get around to it, but I thought it would be useful to offer you a checklist of possible sources of cash. Clearly most of them might not apply to you, but all you need is one good idea. We don't recommend any specific idea for any one investor. We don't know your financial circumstances and as always we recommend you take professional advice. But this could be a useful starting point.

Finding Cash

Cash under the bed
Cash deposits - bank's building societies etc
Savings accounts - including overseas
Friends
Family
Cash ISA's (be aware of tax implications)
Relatives who are leaving you money in a will, but give you an advance
What else?

Easy To Sell Assets

Stocks
Shares
Gilts
Bonds
Endowments
With profits life policies
Unwanted antiques
Unwanted cars
Unwanted furniture
Fine wine
What else?

More Permanent Assets

Underperforming Investment property
Holiday Property
What else?

Borrowing

Frequently you don't need to sell assets but you can borrow against them, giving you the best of both worlds - keep the asset and raise cash

Remortgage investment property
Remortgage personal property
Secured loans
Unsecured loans
Credit cards
What else?

I'm sure there is loads I've missed out. If you found this a useful list let me know!

Want some help to raise cash - we can introduce you to brokers for secured loans and re-mortgages. Call us on 01273 447 300 or email questions@axiscontact.com

Live in Abundance

Rod sig

Rod Thomas FCA

Posted in Property Essentials

5 responses to 'How To Raise Cash For Investment'

Edwin

Added 10-May-2010 16:29

In order to exert a pull on investment money, three criteria must be fulfilled: you must have a practical idea that can sell itself on its merits, not on its exuberance; you must yourself have a clean and immaculate record that shows know-how in achieving success in the field of endeavor; and you must be competent enough to run a company and then grow that company from a basic idea into a constantly profitable ongoing concern

Rod Thomas

Thanks for your insights!

Carlisle

Added 23-Mar-2010 08:43

This motivates people that there's a lot of ways to start commercial property investment. We just have to believe in ourselves that we can.

Rod Thomas

Thanks for your input. In my experience most failure to succeed starts with a failure to believe that we are capable of achieving. The important piece is that we are ALL capable of achieving!

John

Added 21-Jun-2010 16:01

The blog in an insight to financial planning and money matters. While most of us struggle to make more profit and smoothen the deal flow with cash and do not succeed most of the times due to lack of awareness and experience, the notes mentioned are made to direct us in achieving a smooth cash flow and making money for savings and investment.

Rod Thomas

Thanks for your helpful comments.

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Added 23-Nov-2010 09:51

Again another helpful post from Rod, I really love it.Many of us are willing to invest with little funds, I am sure this post is going to help those people.

michelpollard26

Added 28-Apr-2011 11:00

This site was very helpful for me thanks a lot for sharing such newsy and informative site in this blog. Thanks a lot for the useful stuff because it was very helpful for me.

Rod Thomas

Appreciate the positive feedback.